How do I safeguard my donor intent?
Once a gift is made, there are strikingly few protections for donor intent. There is no guarantee that the terms of the gift agreement can be enforced. However, the agreement can be structured in such a way to include provisions that protect the intent of the gift. For instance, requiring the university to supply an annual report to the donor, or the donor’s descendants, and a third-party organization will incentivize the school to honor the terms. Or, as the following case study shows, a donor can include a “clawback” provision that requires the school to return the money should the agreement be violated.
The Pizzagalli Chair of Free enterprise at the University of Vermont
Angelo Pizzagalli, a highly successful business leader, had long been a generous donor to his alma mater, the University of Vermont (UVM). Through a gift made in 2017, he sought to create a lasting legacy, one that would emphasize and explain the role of free enterprise in an open society, attracting and inspiring students with an entrepreneurial spirit. He enlisted the help of the Fund for Academic Renewal (FAR) to establish a chair that would fulfill his intent.
Mr. Pizzagalli formed a specific vision for the endowed chair: It ought to be filled by a professor capable of communicating to students the integrated nature of capitalism and democracy. FAR advised the crafting of the gift agreement between Mr. Pizzagalli and the UVM Foundation so that his vision would be fulfilled while respecting academic freedom. The gift agreement included a statement of purpose from Mr. Pizzagalli outlining his intentions in creating the new position. The agreement also included a clear, but brief list of fundamental concepts that the chair should cover in his or her teaching.
A reverter clause, or clawback provision, was a critical element of the gift agreement. Should the university fail to abide by the gift’s terms, or fail to select a chair recipient by the agreed-to criteria within the agreed-to time frame, then the agreement is nullified, and the university foundation must return the gift to the family. This clause provides a strong incentive for the institution to honor donor intent.
In 2019, Andrey Ukhov was inaugurated as the first holder of the Pizzagalli Chair of Free Enterprise in the Grossman School of Business at the University of Vermont. “We are very appreciative of the donation from Angelo Pizzagalli and the Pizzagalli Foundation that made it possible for the University to attract such extraordinary talent to our faculty,” said UVM President Tom Sullivan. Dean Sanjay Sharma echoed President Sullivan’s sentiments, stating that the hiring of Dr. Ukhov “adds greatly to the intellectual depth of our school and will help elevate our global reputation.”
Through targeted giving, donors like Mr. Pizzagalli play an important role in restoring viewpoint diversity and academic excellence to our institutions of higher learning. A well-crafted gift agreement helps ensure that the university respects donor intent while being able to exercise its right to academic freedom.
FAR can help you:
- Structure gifts to ensure respect for donor intent.
- Assist in negotiations with colleges and universities.
- Develop provisions that make sense for each kind of gift.
- Provide legal consultation to determine whether the agreement includes adequate protections.