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Valparaiso Univ. Law School

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Saturday, November 27, 2004

Is it a gift or a contract?

As donors to colleges and universities seek to place more strings on their gifts, and to more vigorously enforce their desires, disputes between donors and recipients are becoming more common, reports the New York Times today.  And the question whether the money arrives as a conditioned gift or as part of a contract -- treated almost 80 years ago by Chief Judge Cardozo in the classic case Allegheny College v. National Chautaqua County Bank of Jamestown, 159 N.E. 173 -- seems likely to be back on the table.  As reported in the Times, Paul Glenn, a major donor to the University of Southern California, doesn't call what he does "giving" any more.  "Instead, he likes to say that he strikes deals with universities for the betterment of humanity, then polices them with all the ardor of a businessman who has been burned, badly. . . We now know that there's got to be a quid pro quo here.  This is not a donation.  It's a contract, and both parties have to live up to it."  Whether the courts will see a quid pro quo or a condition remains to be seen.  In the meantime, colleges and their donors are drafting more precise agreements to govern at least the larger gifts, specifying more clearly the expectations of both parties to the transaction.  

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