In May, following the passage of the Donor Intent Protection Act in Kansas, Philanthropy Roundtable launched a monthly series on donor intent controversies around the country to better inform those who care about this important topic. This edition of our Donor Intent Watch again focuses on several higher education disputes, this month in Arizona and California.
We also have two disappointing updates, one on a Dartmouth College case we featured in May and the other on proposed donor intent legislation in Ohio. We encourage donors to contact us with any questions they have about our featured items and to consult additional resources on donor intent at the Roundtable’s Donor Intent Hub.
Discord at Arizona State University
Philanthropist Tom Lewis made headlines this month when it was revealed he had withdrawn his funding for the T.W. Lewis Center for Personal Development at Barrett, Arizona State’s Honors College. His decision ended a 20-year relationship between Lewis and his wife, Jan Lewis, and Barrett. Lewis has taken great care with his grants in higher education, and we featured him prominently in our donor intent guidebook, “Protecting Your Legacy.”
His philanthropy at ASU began with small grants to Barrett, expanded to significant scholarship offerings and culminated with the founding of the Center for Personal Development, which offered Barrett students innovative courses, workshops and a speaker series. At no time did he fall into the endowment trap, but instead structured larger awards as grants made in increments over a limited term, with continued donations dependent on satisfactory progress reports. “Start small and start short,” he advised other donors.
Lewis’s style of grantmaking made it possible for him to pull his support in the wake of campus protests and the alleged termination of the Center’s executive director, following a February 2023 presentation at the Lewis Center on “Health, Wealth and Happiness.” Lewis expressed disbelief at the “outrage” sparked by the event’s mostly conservative speakers, saying:
We expected some opposition, but I was shocked and disappointed by the alarming and outright hostility demonstrated by the Barrett faculty and administration. … After seeing this level of left-wing hostility and activism, I no longer had any confidence in Barrett to adhere to the terms of our gift, and made the decision to terminate our agreement, effective June 30, 2023. I regret that this decision was necessary, and hope that Barrett and ASU will take strong action to ensure that free speech will always be protected and that all voices can be heard.
While this is an unfortunate conclusion to what had been a productive relationship, Lewis has the satisfaction of knowing he did not leave funds behind in a perpetual endowment that would no longer align with his values.
Read more here and here.
Hastings College of the Law Changes Its Name to UC College of the Law, San Francisco
On September 30, 2022, California Gov. Gavin Newsom signed a bill to change the name of University of California Hastings College of the Law to University of California College of the Law, San Francisco. Within a week, the Hastings College Conservation Committee, which includes alumni and six descendants of the law school’s founder, Serranus Clinton Hastings, filed a lawsuit against state and school officials.
The plaintiffs say the removal of Hastings’s name violates a contractual agreement made between Hastings and the state in 1878 when he made a gift of $100,000 in gold to establish the institution. Among other stipulations in that agreement, the lawsuit argues, was one which ensured that the school would forever be called the “Hastings College of the Law,” and which promised Hastings’s heirs the return of his gift —with interest —should the school ever “cease to exist.” That amount is currently some $1.7 billion.
The dispute erupted in 2017 when the San Francisco Chronicle published an op-ed calling for renaming the law school because its founder had encouraged and financially supported lethal violence against Native Americans in the 1850s. In response, a Hastings Legacy Review Committee was formed and commissioned a three-year study on the matter. The current lawsuit contends the study raised doubts about any direct involvement of Serranus Hastings in the deaths of members of the Yuki tribe.
The plaintiffs also note that, in September 2020, Hastings’s dean, David Faigman, recommended against any name change, but suggested instead that the school engage in “developing a true partnership between the descendants of those [S.C.] Hastings wronged and the school that bears his name, [which] will create substantive opportunities to transcend that history and live and work for common goals.”
When another article accusing Hastings of masterminding a massacre of Native Americans appeared in The New York Times in late October, 2021, however, the response abruptly changed. Within days of the article’s publication, the law school’s board resolved that Dean Faigman should collaborate with California’s state government to remove the Hastings name from the institution. A bill authorizing the change, AB 1936, was introduced in the California Assembly on February 10, 2022. It passed both Assembly and Senate without a negative vote in August of that year, was signed by the governor in September and took effect on January 1, 2023.
This will be a particularly interesting dispute to follow because of the use of legislation by California to invalidate the 1878 agreement. The lawsuit argues this is not only “an unconstitutional impairment of the state’s contractual obligations to S.C. Hastings and his descendants,” but it also “violate[s] constitutional prohibitions against bills of attainder and ex post facto laws, as well as the California Constitution’s requirement that the College remain in its existing ‘form and character,’ free from sectarian or political influence.”
Read more here.
Update on Dartmouth College Lawsuit
In the May 2023 Donor Intent Watch, we discussed a case at Dartmouth College concerning a 2002 restricted gift made in the will of the late Robert T. Keeler for the “sole purpose” of maintaining the school’s golf course. A second restriction advised the college that any funds not used for that purpose were to be returned to Keeler’s charitable foundation. In 2020 Dartmouth closed the course, but the New Hampshire Attorney General’s Charitable Trusts Unit determined that because financial reasons spurred the closure, Dartmouth would be allowed to keep the funds and use them for “golf-related” purposes, including financial support of the men’s and women’s varsity golf teams. The estate of Robert T. Keeler filed a lawsuit rejected by a circuit court on the grounds that the estate of Robert T. Keeler did not have standing to bring such a suit. In response to an appeal filed by the estate to the Vermont Supreme Court, the decision of the circuit court has been affirmed by a unanimous vote.
Legal standing is all too frequently a stumbling block in efforts to protect donor intent, and in this case, the use of a will to convey the donor’s restrictions was insufficient to establish such standing. Dartmouth was ultimately successful in maintaining control of the funds because “the statement of understanding between the Keeler estate and Dartmouth that formalized the gift made no provision for the estate or the foundation to recover the money if the golf course was closed.” Donors should certainly consider bringing in legal representation to help craft a carefully worded gift agreement with the recipient institution – possibly one which names a contingent beneficiary with legal standing to sue.
Read more here.
Update on Ohio Donor Intent Legislation
Thank you to Jeff Moritz, son of Michael Moritz, for whom the Ohio State University College of Law is named, for alerting us to the outcome of proposed donor intent legislation in Ohio. Senate Bill 83 had passed the state Senate along party lines, with Republicans voting in its favor. That bill contained controversial higher education provisions, but included a donor intent protection amendment for endowment agreements between donors and state higher education institutions.
The bill was added to the Senate version of the Ohio biennial budget in mid-June, but to gain the support of the Ohio State Bar Association, the bill’s proponents had agreed to a reduced statute of repose and the inclusion of only those endowments in place prior to the date of enactment. In the end, because of widely acknowledged disagreement between the Senate and House over the bill’s higher education content, SB 83 was removed from the budget in its entirety. We will stay in touch with our friends in Ohio as Moritz notes they “will be regrouping and determining our next steps over the next few months.”
Protect Donor Intent
For more information, please visit Philanthropy Roundtable’s donor intent hub.
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