YOU CAN'T TAKE IT WITH YOU, BUT CAN YOU TRUST ANYONE?

Saturday, October 25, 2003

If I had half a billion dollars to give away, I'd think long and hard about what I wanted the money used for, and I'd want some assurance that the people who managed it after my death respected my wishes.

Of course I don't have that kind of money and never will, but the Robertson Foundation does. Charles and Marie Robertson, who established it in 1961, were perfectly clear what they wanted it used for: to prepare people for careers in government service, especially ``in those areas of the Federal government that are concerned with international relations and affairs.'' It's in the articles of incorporation.

They established a graduate school for that purpose in the Woodrow Wilson School of Public and International Affairs at Princeton University. The foundation has a seven-person board, with four members from Princeton and three representing the family, and it has given the university more than $200 million over the last 40 years. Foundation money covers about 75 percent of the Wilson School's operating budget.

But according to the founders' son William, a trustee, it isn't being used for the intended purpose. Only a few of the school's graduates do in fact go into government service. And worse, he has said, Princeton treats the foundation money ``as if it were Princeton's personal piggy bank.''

For instance, in June 2001 the four university trustees approved using $13 million from the foundation's funds to build Wallace Hall, which is now home to a variety of social-service research programs and centers having nothing at all to do with preparing people for careers in government service. The three family trustees say they weren't notified.

In addition, the university has begun moving the foundation's assets into the control of the Princeton University Investment Company, which manages the university's endowment, although the articles of incorporation require the foundation's assets be kept and managed separately.

Of course, anything like this is going to end up in court. In July 2002 William Robertson, the other two family trustees and two of their siblings sued Princeton. Robertson told Bloomberg News that his goal was to take back control of the foundation from Princeton so the money could go to universities that supported his parents' vision.

``The idea that they can violate my parents' dream and generosity is just unbearable,'' Robertson said.

In June 2003 a New Jersey court denied Princeton's motion to dismiss the case, saying there was sufficient reason to think the university trustees ``had divided loyalties'' that the case should go to trial.

Yes, I would think that the prospect of converting $560 million from restricted to unrestricted university funds might be conducive to divided loyalties, even for a university as well off as Princeton, whose endowment is more than $8 billion.

I would be somewhat sympathetic to the idea that a foundation's mission must sometimes alter in responses to changes in the larger society, and that after enough time has passed, trustees may legitimately be uncertain of what the founders would have chosen. If someone long ago left money for scholarships for students at a women's college, and the college later decided to admit men, would the donor have wanted the scholarships to be open to all students or restricted to women?

But in this case there is absolutely no room to doubt what the founders wanted; it's just in conflict with what Princeton wants. No wonder the court said there was reasonable doubt that the board majority was disinterested and acted independently.

And even if there were, over time, reason to change the foundation's mission -- something that could be negotiated -- nothing justifies changing the way its money is managed in contradiction to what the university agreed to when it accepted the gift. After all, the foundation's management has substantially outperformed the university's management.

Douglas Eakeley, a lawyer who represents Princeton, told Bloomberg, ``Princeton would not have accepted such a gift unless it could have full control over the fund and its administration.'' He belittled the Robertson case as having ``the earmark of a personal vendetta.''

It sounds more like righteous indignation to me, but whatever Robertson's motives, his case (along with a number of others in recent years) has enormous implications for large-scale philanthropy. If potential donors come to think that they can't trust even such distinguished institutions as Princeton to honor their wishes, how will they react? Perhaps by making sure their money is mostly spent while they are still around to oversee it, but that is difficult to plan for and potentially wasteful, in the same way that agencies rush out and spend in the last few weeks of the budget year so their budgets won't be cut.

Many people who raise money for charity endorse a ``Donor's Bill of Rights'' that includes the right to be assured their gifts will be used for the purposes for which they were given.''

Organizations that accept gifts should act in accordance with that principle.