Strings Attached Donors and estates are
sparring with charities over who controls endowments
By Julian E. Barnes Two years ago, the
Metropolitan Opera used a gift from Sybil
Harrington, the late Texas oil heiress, to televise
an abstract production of Wagner's Tristan
und Isolde. The stark, geometrical set was draped
in shadows, and one reviewer said the castle looked
like a stovepipe with Isolde "standing in the
middle of the orange oven." Harrington's
estate says the televised production violates the
philanthropist's restrictions on how her $33
million was to be used, which was to support opera
performed in the "traditional manner." In
July, the estate sued the Met to recoup some of the
funds and obtain veto power over how the remainder
is spent.
advertisement
After years of working closely with
Harrington, the Met says it knows what she liked
(Wagner, with a focus on the singers) and what she
didn't (setting 19th-century operas in the
present day). Now, the Met argues, the estate wants
a level of artistic control Harrington never had and
didn't want. "A donor can say how they
wish the funds to be used; that is fine," says
Sharon Grubin, the Met's general counsel.
"But we can never yield artistic integrity to
anyone."
The fight at the Met is the latest
example of a struggle that has become intrinsic to
modern philanthropy. Many wealthy donors want their
money to help shape society long after they're
gone and have strong ideas of how that legacy should
be put to use. Institutions, which usually outlast
individuals, want the latitude to adapt their
programs to new discoveries, altered tastes, or
changing times. "We are going to see more and
more negotiations over these large gifts," says
Paul Schervish, director of the Boston College
Social Welfare Research Institute. "Both donors
and institutions are trying to do what they believe
is best for the world."
Floodgates.
Traditionally, it has been up to state attorneys
general to ensure that nonprofit groups use
donations as intended. Suits by donors or their
heirs were often dismissed to protect nonprofits
from frivolous complaints. That changed in 2001 when
a New York state appellate court ruled that Adele
Smithers-Fornaci could sue St. Luke's-Roosevelt
Hospital Center for failing to abide by the terms of
her late husband's 30-year-old gift, which was
to be used for the treatment of alcoholism through
abstinence. The hospital used the endowment created
with the original $10 million gift to fund other
programs, says Smithers-Fornaci, and began using
moderation methods to treat alcoholics. The hospital
also sold the mansion where the clinic was housed.
"When you give $5, $5,000, or $5 million, you
give it for a specific purpose, and that is how the
money should be spent," says Smithers-Fornaci.
Edward Kornreich, a lawyer for the hospital,
says giving heirs the right to sue could hamper
institutions' ability to allocate their
resources properly. "Heirs do not have the same
charitable impulse as the donors, and in some cases
they are antagonistic," says Kornreich. The
case was settled in October, with both sides getting
part of the money from the clinic building sale.
Now, more judges have given the green light to heirs
to go to court. "All of a sudden, the rules
have started to change," says Michael
Peregrine, a Chicago lawyer who represents nonprofit
healthcare institutions. In New Jersey, heirs of
Charles Robertson want Princeton University's
Woodrow Wilson School of Public and International
Affairs to give up an endowment exceeding $500
million because a majority of the institution's
graduates do not choose to work for the State
Department, as the donor wished. In California,
philanthropist Paul Glenn is suing the University of
Southern California, arguing the school has misused
a $1.6 million gift he made in 1995. Glenn is now
channeling his money directly to individual
scientists to promote the study of aging.
Nonprofit groups worry they face an onslaught of
resource-draining lawsuits, not to mention threats
to their academic, scientific, and artistic freedom.
Treading carefully lest they upset potential donors,
institutions have begun to push for more
flexibility. But experts are warning potential
donors of the perils of giving up the reins. Laura
Peebles, a director with accounting giant
Deloitte's national tax office, says she
counsels clients that once their money is given to a
charity, their influence erodes. "It's
like children: You can raise them right, but you
cannot control them."