Yale’s New Planned Giving Policies Signal Trouble Ahead for Legacy Givers
The most heated controversies in the world of philanthropy revolve around legacy gifts and the intent of their donors. The trajectory of the Ford Foundation or the saga of the Robertson family gift to Princeton—even the recent Sherlock Hibbs endowment to the University of Missouri—are well known stories of departing from donor intent.
Circumstances and organizations change over time and there grows a temptation to deviate from decades-old restrictions. But integrity and honesty—not to mention being able to earn the trust of future donors—should instill a respect for a donor’s legacy, even as funding priorities shift, or it becomes inconvenient or “unfashionable” to uphold the donor’s original vision.
Unfortunately, however, many organizations are keen on tactfully avoiding the complexity of restricted legacy gifts to retain maximum control over the use of the gift funds. Yale University has added new “recommended language” to its bequest intention form. Other universities are sure to follow suit, which is too bad, as the tactic here is cunning.
TRUSTEES IN CHARGE
For donors who choose to direct their gift to a specific purpose, the gift intention form suggests that the following language be included, subtly allowing the Yale Board of Trustees to modify how the funds are used in the future:
“In the event that at some future time due to changed circumstances, in the judgment of the Yale Board of Trustees, it becomes impractical to apply my bequest to the designated purpose(s), the Yale Board of Trustees shall make such modifications as will appropriately recognize my interests in coordination with university priorities.”
Of course, this language is not necessary to include, and any savvy donor or philanthropic advisor would know this—but the motivations here are concerning nonetheless. As a norm to follow, “impracticality” is vague, to say the least, and leaves enormous latitude to individuals with a vested interest in rerouting donor funds. This provision, if included, would let Yale ignore the donor’s wishes and push them aside as powerless parchment barriers.
TAILORED GIFT AGREEMENTS
Needless to say, circumstances do change and the use of donor funds may need to shift over time. But rather than simply giving the board of trustees unlimited discretion over the use of funds, the university and the donors should work together to craft a gift agreement that makes their interests and ideals crystal clear. The goal of a gift agreement should be to make the donor’s goals and values so obvious that the university can be held responsible for the level of its stewardship.
The responsibility cuts both ways, in other words: the university ought to respect the donor’s wishes, but the donor ought to make an intelligent effort to ensure that the gift can benefit the university over time through changing circumstances.
Donors to any university who include the kind of language that Yale recommends should be aware that their gifts may be handled like that of the late Robert Morin to the University of New Hampshire (UNH).
After serving as a librarian at UNH for 50 years, Mr. Morin left a bequest of $4 million to the university, reserving $100,000 of that gift for the library. Not independently wealthy, Mr. Morin lived beneath his means in order to amass such an impressive sum of money. However, rather than using the funds in a way that showed appreciation for his sacrifices and service rendered to the university, UNH built a video scoreboard for its football stadium. While technically legal, the decision does not reflect well on UNH.
Unfortunately, that decision also reflects the prevalent attitude of so many colleges and universities toward their donors. The language of Yale’s bequest form is a polite way of presenting this very same attitude: it asks donors to give Yale permission to use a gift in a way that is legal, but not necessarily representative of the donor’s wishes.
Yale recommends that donors grant Yale its discretion for directing funds so that the university can meet “the evolving educational needs of future generations of students.” While some donors may wish to support universities in this way, others who wish to restrict their gift ought not to be duped into giving the university unintended discretion over the gift. Educational needs may evolve, yes—but the core of education remains the same. Any donor should be able to make a restricted gift, if they wish, that will not become obsolete during the lifetime of the university.
A better solution to the challenges of legacy giving is one by which donors design and provide thoughtful gifts for the long term, rather than stumble into giving a free pass to institutions to ignore their intent. Done well, legacy contributions can result in some of the most meaningful resources an institution has, gifts that endure from generation to generation. Treating donors as true partners rather than simply viewing them as funders, a piggy-bank for the future, would be a step in the right direction for all institutions, including those as storied and Ivied as Yale.
This article by Emily Koons Jae and Rebecca Richards originally appeared in Philanthropy Daily.