Princeton Settles Legal Battle Over Alleged Misuse of Gift

<p>Princeton Settles Legal Battle Over Alleged Misuse of Gift</p>

<p>Ending a long legal battle over how closely a university must adhere to the terms of a gift, Princeton has reached a settlement with heirs to the A&P grocery fortune, allowing the university to keep the bulk of a fund worth hundreds of millions of dollars, the New York Times reports.</p>

<p>The suit stems from a $35 million endowment gift — which peaked at more than $900 million in June —the university received in 1961 from grocery heirs Charles and Marie Robertson. At the time, the Robertsons stipulated that the money should be used to educate graduate students for careers in government at the Woodrow Wilson School of Public and International Affairs. </p>

<p>The case did highlight how difficult and costly it can be to challenge wealthy universities. Even without going to trial, each side spent more than $40 million in legal fees.</p>

<p>PND</a> - News - Princeton Settles Legal Battle Over Alleged Misuse of Gift</p>

<p>$40 million in legal fees is astounding. There's no way that either side spent that on a time basis, even over 15 years. There has to be a contingency component in that. I would also note that, based on the settlement, Princeton had real problems in this case.</p>

<p>But in a lawsuit filed in 2002, the Robertsons' descendants claimed that Princeton had ignored the terms of the gift — the value of which peaked at more than $900 million in June — by spending the funds on training students for a broader range of careers.</p>

<p>Anyone know how broad they were going?</p>

<p>Not sure they would have to go very broad to still be in violation of the terms of the gift. Educating grad students for careers in government at the Woodrow Wilson school sounds pretty specific. Doesn't appear that Princeton had much of an impossibility/impracticality defense.</p>

<p>$40M in legal fees does seem incredible, but the company I work for is involved in a suit that has eaten up a good $4M in just over 2 years.</p>

<p>If they're given a gift with a stipulation that they accept, why would they have misused the funds in the first place? I might have been planning to donate my second $100M to Princeton with some stipulations but now I think I'll donate it elsewhere since Princeton doesn't follow their agreements. (I'm still working on that first $100M so it may take a while for this second $100M to arrive.)</p>

<p>While it may or not be the case in the Princeton gift, sometimes unexpected things happen to the donors money on the way to the college. </p>

<p>I had a former co-worker who left 1000 shares of pre ipo stock to his alma mater - probably worth 20,000 when he made out his will. Three years later, when he passed away, GOOG was up to 700 a share or 700,000. Had he made a specific request in his will "can only be used for funding database professors", that would have been the best endowed chair in the world. </p>

<p>A more dramatic example, while on a recent tour of Pomona, they mentioned that the donor who had left money to be spent on the Hahn building - and since the fund had grown so much, the building ended up the "most technologically advanced building in Southern California".</p>

<p>I heard an NPR story on this. Apparently, somehow the scholarships were being used primarily by kids who become i-bankers, rather than enter public service, and that's what ticked the family off. </p>

<p>The story made a good point of saying that sometimes gifts are left that are very specific to the times and don't hold up well. An example was money left to fund "homes for unwed mothers." Many were around at the time but not so much now.</p>

<p>At T'giving I spent time with a couple who set up a scholarship at a small LAC, and they had just been approached by their alma mater about changing the parameters of the scholarship to be more inclusive. He's a trustee there, so he was happy to do it.</p>

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If they're given a gift with a stipulation that they accept, why would they have misused the funds in the first place?

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<p>The gift was made almost 50 years ago. It was $35 million and has grown to nearly $900 million. I cannot imagine you could spend nearly a billion dollars on its original intent if you tried. I'm sure that money pays full tuition for every student and salary for ever professor in the Woodrow Wilson School. What's 200 million spent on other things? From what I gather, the original donors were very supportive and proud of the University as a whole and many think the donor's would have been happy with the gift's accomplishments. You can't force graduates into government positions. </p>

<p>I'm glad Princeton won and it showed that greedy grandkids can't take back the well-intended gift of their ancestors. BTW, they wanted nearly $600 million. Get real. </p>

<p>From another article: </p>

<p>*All the evidence suggests that when Charles and Marie Robertson gave Princeton $35 million in 1961 that Charles Robertson wanted his donation to be controlled by Princeton.</p>

<p>The Robertson Foundation had seven seats on its board and Princeton chose four of these seats.</p>

<p>But Robertson wanted some say over how his money was used. This is why the Robertson Foundation was a legal entity that existed separately from Princeton, even though its funds were controlled by Princeton.</p>

<p>This ambiguity over the Robertson Foundation's status---independent of Princeton, but controlled by the university---was ultimately resolved in the university's favor. The case shows that any donor who gives partial control over his gifts to a university should expect that the university would eventually exert complete control over how the gift is used.*</p>

<p>Robertson</a> V. Princeton -- Who Really Won? (Originals)</p>

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I'm glad Princeton won and it showed that greedy grandkids can't take back the well-intended gift of their ancestors.

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<p>There are no victors here! And, it is a shame that this case was settled in 2008. It should have never dragged on for that long and should have been resoved years ago ... or it should have been decided on its real merits. </p>

<p>No matter what, it's extremely doubtful that the original donors are looking down at Princeton with any degree of happiness.</p>

<p>No victors here? The obvious winners:</p>

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Even without going to trial, each side spent more than $40 million in legal fees.

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</p>

<p>If the article is accurate, according to my rough calculations... that would be a total of $80mm in legal fees, presumably paid to lawyers. That sounds like a win-win to me.</p>