Large donations to colleges and universities have a troubled history, but nothing compares with the legal battle between Princeton University and the Robertson family. This fight has important lessons for anyone who is contemplating a gift to an institution of higher education.
Here’s the background.
Charles Robertson was a Princeton graduate, class of 1926. His wife inherited a fortune through her grandfather, the founder of the A&P grocery chain. In 1961, the Robertsons created the Robertson Foundation and endowed it with $35 million worth of A&P stock. The certificate of incorporation stated the purposes of the Foundation:
“To establish or maintain and support, at Princeton University, and as a part of the Woodrow Wilson School, a Graduate School, where men and women dedicated to public service may prepare themselves for careers in government service, with particular emphasis on the education of such persons for careers in those areas of the Federal Government that are concerned with international relations and affairs….”
That language makes it clear that the income from the Foundation is supposed to go for a very definite purpose. The donors wanted their gift to be used for graduate training in international affairs with the expectation that most of the students would work for the federal government in a capacity relating to their training. In a 1962 letter, Charles Robertson wrote about his desires: “If substantial numbers of persons trained in the School do not go into government service…then no matter how excellent their training may have been, the basic purpose of the School is not being achieved.”
The trouble is that Princeton officials wanted to spend much of the money from the Robertson Foundation on other things.
As early as 1972, Charles Robertson expressed his dissatisfaction with the way Princeton was using the money from the Foundation, and at his death in 1981, matters were still quietly simmering. Not until 2002, however, did the volcano erupt in a lawsuit brought by several members of the Robertson family. Their suit charges that Princeton has illicitly commingled Robertson Foundation money with the university’s endowment and has used Foundation money for purposes unrelated to those desired by Charles Robertson. Their lawyers have discovered a lot of damning evidence against the university.
In April 2002, for instance, university secretary Thomas Wright sent a memo to president Shirley Tilghman. It called her attention to a document which was about to be disclosed to the Robertson family, a document clearly showing that $750,000 of Foundation money was being used to pay student tuition outside of the Wilson School. Wright advised that the Robertsons would be “greatly upset” over this revelation and said that the university would need to decide whether or not to disclose the document. Princeton decided to revise the document so that the fact of the outlays outside the purposes of the Foundation were hidden. Princeton now admits that its action was “inappropriate.”
Plaintiff William Robertson is not placated by Princeton’s saying “sorry” for having acted deceptively. “We have been mugged, and we want justice,” he says.
Since the case began, the two sides have burned through more than $22 million in legal fees.
Princeton wants to keep control over the Robertson Foundation money, which represents about 6 percent of its entire endowment of more than $11 billion, even though it seems clear that university officials have long been circumventing the restrictions placed on the use of the money by Mr. Robertson. For example, dean John Lewis of the Wilson School wrote in a memo to Princeton’s president in 1972, “What bothers me” about the terms of the gift “is the unspoken premise that, with respect to any American institution dealing in public affairs, the highest loyalty automatically must be to the U.S. government….The university should resist a blind commitment to nation-state parochialism.”
Whether one agrees with Lewis or not, the crucial point is what the donor wanted his money to be used for. Had he meant to give the university a free hand, he would have, but chose not to. Princeton’s position boils down to saying that if a donor puts restrictions on a gift that university officials come to see as stupid, they should be allowed to spend the money however they think will do more good.
The case is expected to come to trial later this year in a New Jersey state court. As a remedy, the Robertson family is asking that they be allowed to use the gift money independent of the university. They also want restitution for all improper expenditures, plus damages. How this will be resolved is anyone’s guess.
Much is at stake. Each year, American colleges and universities receive about $24 billion in donations, and big donations often come with strings attached. If Princeton’s position prevails, donors who want to ensure that their generosity will only be used in ways they approve of will have to look for new legal approaches that create an impenetrable wall between their money and university control.
Actually, that’s a good idea no matter how this legal donnybrook turns out.