December 1, 2014
Why it’s important to be pedantic about donor intent
Agift to your department can seem so straightforward, like the first time a donor told me, “I want to endow a scholarship for a student.” Easy enough, I thought. Then a development officer explained that in accepting this seemingly simple gift, we had to satisfy tax laws, foundation rules, departmental mission and priority, and “donor intent.”
That last criterion was the one that needed the most painstaking definition. What did the donor mean by “student”? An undergraduate, a graduate student, or either? A student already in good standing in our major or a first-year recruit? Could the student be a double major or just minoring in our field? Would requirements include a certain GPA in high school or college? Was there a geographic condition on the gift—that the recipient come from a particular high school or the donor’s home state? Would the scholarship rest on objective academic merit, faculty recommendation, or “need”? How would each of those be defined?
And so on.
Why so much attention to detail? Because it’s your obligation as a good steward of any funds you raise (more on that in future essays in this series). But there are other reasons to be meticulous about donor intent. You, as the academic on your fund-raising team: (a) are ethically liable to fulfill donor intent; (b) will be regularly audited by your college or university foundation to ensure that you are following donor intent; and (c) will shape relationships with other donors by how you honor the wishes of any one of them. Put another way, the more attentive you are at the front end of a gift, the less trouble you will encounter on the long (theoretically perpetual) back end.
Over the years, I have compiled a growing checklist of tips to make sure of satisfying a donor’s wishes.
Know the rules. Money raised for academic purposes at colleges and universities, whether private or public, is governed by a host of entities and legal requirements. One rule that comes up on occasion: Under tax laws, a private gift cannot directly benefit the benefactor, other than as a tax deduction. So, for example, a donor cannot provide a scholarship that then goes to his granddaughter. Somewhat more hazy is the question of influence. I once had to explain to a donor of a professorship that he could not sit on the committee to choose the recipient. Instead, I worked with him on some faculty-friendly criteria for what kind of candidate would be selected.
Another common restriction is when institutions set a minimum for certain types of gifts. For example, one university may require a gift of at least $1-million for an endowed chair, while another may set the floor at $3-million.
Likewise, how much you have to give to win “naming rights” (whether for a brick or a garden or a laboratory) will vary, as will the way terms like “scholarship,” “fellowship,” or “assistantship” are defined.
The more familiar you are with those rules, the better you will be able to safeguard donor intent.
Read the will. Reading the fine print is as vital for established gifts—especially if you are new to your job—as it is for recent ones. Two days after becoming director, and thus chief academic fund raiser, of a journalism school, I attended a meeting to review the previous year’s spending from one of our largest endowment accounts. I still shiver at the memory. The money had been given 70 years before, and the donor had no living relatives; the account was represented by a law firm as trustee. The school had been spending the money for a long time—decades—to support full-time lecturers. But the lawyer, who was new to the account, had actually read the will and pointed out that the “intent” was to finance “lectures,” not “lecturers.” That single consonant affected some $100,000 of yearly spending. Oops.
From then on, I vowed never to remain ignorant of existing accounts. I read everything, not just the summary in the scholarship file. And I do not hesitate to ask the dumbest (sounding) questions. Some examples:
- When a scholarship specifies that the recipient be from a particular high school, and that school has since split into two, should we check to determine whether the donor now prefers one school or would consider either one?
- When a graduate fellowship has been designated for an “international doctoral student,” does that mean a non-U.S. citizen whose B.A. or M.A. came from an overseas institution? Or can the student be a non-U.S. citizen educated in the United States?
- A fund is slated to “pay for the technology in [named laboratory space].” But could that cover mobile technologies, such as clickers and iPads?
In short, be pedantic. Better to be picky and sure than end up being reproached because you misunderstood what the donor specified.
Always work in consultation with the development office. The good news about fund raising is that you are never alone. Almost every college and university has a development office. Academics can get into trouble when they go rogue and solicit or, even worse, accept gifts without adequate consultation with the professionals. You may not always see eye-to-eye, but they are the experts on the restrictions under which you operate.
In finding out what donors intend and noting it precisely in writing, you rarely have to invent new descriptors and phrasing. Very likely the foundation folks have seen and heard it all before and will have carefully parsed phrases at hand that fit the intentions of most donors. For the really complicated or tricky gifts or requests, the experts will help you develop novel but appropriate responses.
Don’t rush the closing. In the fund-raising world, tales circulate of “deathbed bequests”—when a donor decides at the last minute to bestow a legacy. I know of one such incident. The gift in question, however, was last-minute only in being made final: The foundation reps and the donor’s lawyers had been working on the wording for months, leading up to the moment of giving.
I know from experience that the heady rush of a proffered gift can sometimes lead to an urge to close the deal as soon as possible. Maybe the donor will change his mind, you worry. While the gift process should not be drawn out—a donor can indeed be alienated if things seem to drag on—the importance of the event should encourage all parties to plan carefully. A few faulty or unclear phrases conceived in haste will cause no end of problems later.
Make sure everyone’s on the same page. A common minefield becomes apparent when what you, your faculty, and your department want is out of sync with what the donor wants. Sometimes the split is a chasm. A dean I know in the sciences discussed a donor who was interested in endowing a chair in a subfield that almost all of the dean’s research-faculty members considered irrelevant and without intellectual merit. Whatever his own opinion, the dean wisely declined the gift. No munificence is worth creating an imbroglio between the administration and academics.
That doesn’t mean you as an academic leader should not take the opportunity to lead. In one case I know of, several donors had expressed interest in establishing a particular program at a department in the social sciences. None of the faculty members there were interested in it themselves. But the chair persisted, and over time they came to appreciate that a modest program in that area would attract more majors, increase the profile of their department, and support some of their other ambitions. They ended up embracing the gift.
Donor intent is rarely a mystery. But you, as the academic representative on the fund-raising team, must make sure that everyone, including the donor, agrees not only on what the outcome of the contribution will be but also on how it will be managed year after year. After all, we are raising money for the future as well as the present. We hope that students, faculty members, and the program will benefit from our work long after we have retired, not just in the next fiscal year. So sweat the details of donor intent, and everyone will win.
David D. Perlmutter is a professor and dean of the College of Media & Communication at Texas Tech University. He writes the “Career Confidential” advice column each month for The Chronicle. His book,Promotion and Tenure Confidential, was published by Harvard University Press in 2010.