Restricted Gifts to Universities are Gaining Popularity

The following entry is based on John Hechinger, Big-Money Donors Move to Curb Colleges’ Discretion to Spend Gifts, Wall St. J., Sept. 18, 2007, at B1.

Historically, alumni have faithfully donated money to their alma maters with no strings attached. However, this practice is beginning to change. Today’s wealthy donors prefer to direct and be able to legally enforce the handling of their gifts. Disputes about adhering to the terms of gifts are becoming increasingly common. In several recent high-profile battles, families of donors attempted to take donations away from the universities, claiming that they were violating the gift terms.

In response to these developments, several philanthropists and prominent businessmen have formed a non-profit organization to advise donors on earmarking their gifts in a legally enforceable manner. The organization recommends donating small gifts over a period of time, setting up an annuity within a trust, and limiting a gift to a professor’s life instead of endowing his or her chair in perpetuity. Some members of the academic community fear that restricted gifts may interfere with academic freedom and institutional autonomy.