{"id":35922,"date":"2023-12-20T01:48:00","date_gmt":"2023-12-20T01:48:00","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=35922"},"modified":"2023-12-21T04:40:37","modified_gmt":"2023-12-21T04:40:37","slug":"what-do-universities-owe-their-big-donors-less-than-you-might-think-explain-2-nonprofit-law-experts","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/what-do-universities-owe-their-big-donors-less-than-you-might-think-explain-2-nonprofit-law-experts\/","title":{"rendered":"What do universities owe their big donors? Less than you might think, explain 2 nonprofit law\u00a0experts"},"content":{"rendered":"\n

Ellen P. Aprill<\/a>, Loyola Law School Los Angeles<\/a><\/em> and Jill Horwitz<\/a>, University of California, Los Angeles<\/a><\/em><\/p>\n\n\n\n

Exchanging gifts with family and friends can become fraught with contradictory emotions. Instead of gratitude, the recipients of expensive gifts may wind up feeling indebted to the givers. And the givers can have regrets too.<\/p>\n\n\n\n

The same kinds of complicated motivations and expectations<\/a> can sour relations between big donors and the institutions they support.<\/p>\n\n\n\n

This dynamic has been playing out in a very public fashion lately with some high-profile donors to prestigious U.S. universities<\/a>. At issue for these donors is the schools\u2019 response to debates and demonstrations on their campuses after Hamas\u2019 terrorist attacks on Israel and the Israeli government\u2019s military campaign in Gaza that followed.<\/p>\n\n\n\n

Disappointed donors<\/h2>\n\n\n\n

Notably, hedge fund manager Bill Ackman has complained<\/a> that Harvard University officials, including President Claudine Gay, have not \u201cheeded his advice on a variety of topics,\u201d including Harvard\u2019s handling of antisemitism and how it should invest his donations.<\/p>\n\n\n\n

Ross Stevens, another financier<\/a>, threatened on Dec. 7, 2023, to take back the US$100 million<\/a> he gave the University of Pennsylvania through a complex transaction in 2017 \u201cabsent a change in leadership and values at Penn.\u201d<\/p>\n\n\n\n

In a letter Stevens released to the media, he alleged<\/a> that Liz Magill, who was serving as the university\u2019s president, had \u201cenabled and encouraged antisemitism and a climate of fear and harassment at Penn.\u201d<\/p>\n\n\n\n

Magill, also on Dec. 7, defended herself from those accusations<\/a> and related criticism from members of Congress, saying: \u201cA call for genocide of Jewish people is \u2026 evil, plain and simple.\u201d She resigned on Dec. 9<\/a>.<\/p>\n\n\n\n

Other high-profile donors who have also voiced their dissatisfaction regarding Penn include Jon Huntsman Jr.<\/a>, a former U.S. ambassador to China and Utah governor, and cosmetics tycoon Ronald S. Lauder<\/a>.<\/p>\n\n\n\n

As scholars of how the law<\/a> governs nonprofits<\/a>, we think these developments suggest that now is a good time to review what donors do and don\u2019t have a right to demand.<\/p>\n\n\n\n

What restrictions apply<\/h2>\n\n\n\n

All donations<\/a> to a charity must support its overall purposes<\/a>. That is, a hospital can\u2019t take the money it receives from donors and give it to, say, an animal shelter operating 500 miles away<\/a>.<\/p>\n\n\n\n

Donors may request specific restrictions on the use of their charitable gifts in an agreement negotiated before the donation is made. And when gifts are solicited through a specific fundraising campaign, such as a bid to raise money for a new building or for scholarships, that money must be spent accordingly.<\/p>\n\n\n\n

State attorneys general and, ultimately, the courts have the power to regulate charities<\/a>. But donors have some tools to police adherence to the restriction they placed on their gifts.<\/p>\n\n\n\n

One way they can do this is by threatening to withhold gifts that they had planned to make unless the charity they have been funding changes course. Depending on the state laws that apply to charities<\/a>, donors may be able to sue for enforcement or reserve the right to do so in gift agreements.<\/p>\n\n\n\n

Some donors include in their gift agreements a \u201cgift-over<\/a>.\u201d This kind of provision redirects the gift to another charity of the donor\u2019s choice if the original recipient violates specified terms.<\/p>\n\n\n\n

Promises of future donations from past donors have always allowed donors to informally exercise some degree of influence.<\/p>\n\n\n\n

But in the current wrangling between donors and universities over claims of antisemitism on campus, threats to forgo future donations have been explicitly tied to all sorts of university actions, such as the statements universities either make or do not make<\/a> regarding international relations.<\/p>\n\n\n\n

The threats have become angrier and more public than in the past. Some of the regret and dissatisfaction is being expressed via op-eds and open letters<\/a>. And the lengths donors have taken to assert leverage have grown more extreme.<\/p>\n\n\n\n

\"Two<\/a>
Harvard President Claudine Gay, left, testified alongside Penn President Liz Magill before a House committee on Dec. 5, 2023, regarding antisemitism on college campuses. Magill resigned four days later. Kevin Dietsch\/Getty Images<\/a><\/figcaption><\/figure>\n\n\n\n

What charities can do<\/h2>\n\n\n\n

Charities can take some solace in the law.<\/p>\n\n\n\n

When donors make charitable gifts, they must irrevocably transfer that property to the charity receiving it. Except in very rare exceptions<\/a>, disappointed donors can\u2019t get their assets back<\/a>.<\/p>\n\n\n\n

In 1995, for example, Yale returned a $20 million gift to Lee Bass, an heir to a Texas oil fortune. Bass objected to the way the university was using that donation, which was supposed to support the study of Western civilization<\/a>. He reached an impasse with Yale after surprising the school\u2019s leaders with a demand they refused to accommodate: that he would personally get to approve four new professors.<\/p>\n\n\n\n

And if a donor attaches too many strings<\/a> to a gift, that can render it ineligible for the charitable deduction<\/a>, missing out on a tax break. Just as with personal gifts, gifts with too many strings aren\u2019t really gifts at all.<\/p>\n\n\n\n

Although donors who have negotiated special conditions in a gift agreement may assert their rights to sue over a charity\u2019s broken promises, that can take a lot of time and energy, while squandering money on legal costs<\/a>. This process can also anger other donors, causing the benefactor to ultimately lose influence with the charity.<\/p>\n\n\n\n

A few tips<\/h2>\n\n\n\n

In the University of Pennsylvania case, about two months after the donors began their public pressure campaign, Penn\u2019s president<\/a> and the chair of its board of trustees had stepped down<\/a>. They resigned in the wake of a contentious congressional hearing<\/a>.<\/p>\n\n\n\n

In this case, some of the disappointed donors got their wish \u2013 with an assist from conservative lawmakers. Congress doesn\u2019t usually get involved in these disputes, and with good reason. Nonprofits are private institutions using private assets<\/a>, even if the assets are meant to advance purposes that are, ultimately, in the public interest.<\/p>\n\n\n\n

So here is our practical advice for donors and the institutions that rely on them.<\/p>\n\n\n\n

Donors shouldn\u2019t try to control a charity through their gifts after the fact. The time to establish limits is before you\u2019ve signed off on those gifts.<\/p>\n\n\n\n

Charities should reject gifts that are offered with strings attached that they aren\u2019t happy about. If gifts have restrictions<\/a>, charities should be aware of that and adhere to them<\/a>.<\/p>\n\n\n\n

We fear that the failure on either side in the controversy now affecting several prestigious schools to abide by this basic guidance can potentially harm not only the freedom and academic integrity<\/a> of a university, as many observers have noted, but also the freedom and integrity of the entire nonprofit sector.<\/p>\n\n\n\n

The best charitable gifts, like the best personal gifts, are not meant as a means to control the recipients.<\/p>\n\n\n\n

Ellen P. Aprill<\/a>, Professor of Tax Law Emerita, Loyola Law School Los Angeles<\/a><\/em> and Jill Horwitz<\/a>, Professor of Law and Medicine, University of California, Los Angeles<\/a><\/em><\/p>\n\n\n\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ellen P. Aprill, Loyola Law School Los Angeles and Jill Horwitz, University of California, Los Angeles Exchanging gifts with family and friends can become fraught with contradictory emotions. Instead of gratitude, the recipients of expensive gifts may wind up feeling indebted to the givers. And the givers can have regrets too. The same kinds of […]<\/p>\n","protected":false},"author":44,"featured_media":35923,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[292],"tags":[1722,1725,14691,2661,14987,687,14695,6030,7259,2183,3050],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/35922"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=35922"}],"version-history":[{"count":2,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/35922\/revisions"}],"predecessor-version":[{"id":35930,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/35922\/revisions\/35930"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/35923"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=35922"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=35922"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=35922"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}