Exchanging gifts with family and friends can become fraught with contradictory emotions. Instead of gratitude, the recipients of expensive gifts may wind up feeling indebted to the givers. And the givers can have regrets too.
The same kinds of complicated motivations and expectations can sour relations between big donors and the institutions they support.
This dynamic has been playing out in a very public fashion lately with some high-profile donors to prestigious U.S. universities. At issue for these donors is the schools’ response to debates and demonstrations on their campuses after Hamas’ terrorist attacks on Israel and the Israeli government’s military campaign in Gaza that followed.
Disappointed donors
Notably, hedge fund manager Bill Ackman has complained that Harvard University officials, including President Claudine Gay, have not “heeded his advice on a variety of topics,” including Harvard’s handling of antisemitism and how it should invest his donations.
In a letter Stevens released to the media, he alleged that Liz Magill, who was serving as the university’s president, had “enabled and encouraged antisemitism and a climate of fear and harassment at Penn.”
Other high-profile donors who have also voiced their dissatisfaction regarding Penn include Jon Huntsman Jr., a former U.S. ambassador to China and Utah governor, and cosmetics tycoon Ronald S. Lauder.
As scholars of how the lawgoverns nonprofits, we think these developments suggest that now is a good time to review what donors do and don’t have a right to demand.
Donors may request specific restrictions on the use of their charitable gifts in an agreement negotiated before the donation is made. And when gifts are solicited through a specific fundraising campaign, such as a bid to raise money for a new building or for scholarships, that money must be spent accordingly.
State attorneys general and, ultimately, the courts have the power to regulate charities. But donors have some tools to police adherence to the restriction they placed on their gifts.
One way they can do this is by threatening to withhold gifts that they had planned to make unless the charity they have been funding changes course. Depending on the state laws that apply to charities, donors may be able to sue for enforcement or reserve the right to do so in gift agreements.
Some donors include in their gift agreements a “gift-over.” This kind of provision redirects the gift to another charity of the donor’s choice if the original recipient violates specified terms.
Promises of future donations from past donors have always allowed donors to informally exercise some degree of influence.
But in the current wrangling between donors and universities over claims of antisemitism on campus, threats to forgo future donations have been explicitly tied to all sorts of university actions, such as the statements universities either make or do not make regarding international relations.
The threats have become angrier and more public than in the past. Some of the regret and dissatisfaction is being expressed via op-eds and open letters. And the lengths donors have taken to assert leverage have grown more extreme.
Exchanging gifts with family and friends can become fraught with contradictory emotions. Instead of gratitude, the recipients of expensive gifts may wind up feeling indebted to the givers. And the givers can have regrets too.
The same kinds of complicated motivations and expectations can sour relations between big donors and the institutions they support.
This dynamic has been playing out in a very public fashion lately with some high-profile donors to prestigious U.S. universities. At issue for these donors is the schools’ response to debates and demonstrations on their campuses after Hamas’ terrorist attacks on Israel and the Israeli government’s military campaign in Gaza that followed.
Disappointed donors
Notably, hedge fund manager Bill Ackman has complained that Harvard University officials, including President Claudine Gay, have not “heeded his advice on a variety of topics,” including Harvard’s handling of antisemitism and how it should invest his donations.
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