alt.education

Holding Colleges Financially Accountable

By INVESTOR'S BUSINESS DAILY
Wednesday, March 12, 2008 4:20 PM PT

Philanthropy: Thomas Jefferson thought it a sin to compel a man to
furnish "money for the propagation of opinions" he opposes. What is it
when a university misuses funds from an endowment?

On Wednesday, a New Jersey Superior Court judge set a trial date for
what might be the most important donor intent case in the history of
an issue that doesn't quite get the attention it deserves.

In Robertson v. Princeton, scheduled to begin Oct. 1, the family of
Charles and Marie Robertson will try to prove that the university has
misused the generous financial gift contributed by the couple.

In 1961, the Robertsons donated 700,000 shares of A&P stock, worth $35
million at the time, to Princeton to create a foundation -- with the
instructions that Princeton would use the endowment to train students
for careers in foreign policy and international relations.

Their goal was to "extend freedom throughout the world by improving
the facilities for the training and education of men and women for
government service." The grant was the couple's way of addressing the
Cold War and the raging Soviet threat.

Princeton, the plaintiffs claim, has not kept its end of the
arrangement. Rather, it has used hundreds of millions of the endowment
-- now worth almost $900 million -- for purposes that do not conform
with the Robertson Foundation's mission. From 1990 to 2003, the family
alleges, Princeton drained the fund of roughly $170 million for:

* Construction projects, including $13 million that was taken from the
foundation without notification and spent to build a facility that
dedicates only a fourth of its space to the Woodrow Wilson School,
which is supposed to be turning out the foreign policy and
international relations students the Robertsons had in mind. The
foundation's money has funded between half and three-quarters of the
school's budget through the years.

* Administrative and overhead costs, many of them padded or bogus, as
well as tuition for students in other disciplines.

* Research activities and programs that are outside of the Robertson
Foundation mission.

Going back to 1962, Princeton has charged the Robertson Foundation
$375 million, less than one-fourth of which, the lawyers say, was
dedicated to instruction that would turn out the scholars the
Robertsons had envisioned.

Family attorneys also say that Princeton -- which is actually placing
fewer students in government slots than before the gift was made -- has
secretly funded administrative and research expenses of the school's
politics and economics departments with money from the endowment.

The family wants the school to pay back all the money it has spent
that is not connected to the goal set forth by the Robertsons and to
"account for all of its expenditures of Foundation funds so that the
court can determine whether such expenditures are consistent with
terms of the restricted gift."

Robertson v. Princeton is not an isolated case. In at least nine
instances over the past eight years, donors have asked to have their
grants returned because the school was diverting funds to expenditures
unrelated to their wishes.

In 1995, Yale University returned a $20 million gift. Left-wing
faculty reportedly coveted the money, or at least a part of it, to
advance a multicultural agenda. But the donor wanted the focus to be
on Western civilization and insisted that the professors hired with
his gift at least acknowledge our culture's accomplishments. At the
time, it was recognized as the biggest gift ever returned to a donor.

While Princeton desperately hopes it will be able keep its hands on
the Robertsons' money, other universities and colleges might not be
inclined to side with the New Jersey school.

If wealthy donors can't be sure their money will be used
appropriately, they're likely to be reluctant to give.

As always, it's the abuse of a few that ruins things for the many.