Wednesday, January 28, 2009
2008 was actually a good year for big donations, according to the Chronicle of Philanthropy. But, the article points out, most of those gifts were made when donors thought they really were getting 11% and 12% percent returns from the likes of Madoff and others:
Even in a year in which the stock market swallowed up nearly $7-trillion in assets, America's wealthiest donors promised greater amounts to charitable organizations than in 2007: $15.5-billion in 2008, compared with $7.3-billion the previous year, according to The Chronicle's annual ranking of the 50 most generous philanthropists.
But most gifts from the donors on the list came from decisions made long before the market plunge that began in September. (In fact, nearly two-thirds of the total given by the 50 biggest donors was the result of two bequests.) And 2009 appears to be a far more challenging time for raising multimillionand billion-dollar donations.
Some of the country's richest philanthropists say the bleak economy has led them to put off making new gifts, and fund raisers at organizations that have previously won eightand nine-figure donations say it's much harder now to seek big gifts.
"We're seeing many conversations that were in progress either slowing down or being deferred, and fewer people willing to begin conversations about gifts at that level," says Brian J. McDonald, vice president for development at Princeton University. His institution received two gifts from donors on The Chronicle's list: a $100-million pledge from the investment manager Gerhard R. Andlinger (tied for No. 17), and a $25-million commitment from Dennis J. Keller, founding chairman of DeVry University, and his wife, Constance Templeton Keller (No. 47).
The article notes that 2008 saw a lot of "promised" gifts and that makes me think about the etymology of the phrase "Indian giver," a phrase used to describe a person who gives something and then wants to take it back. What are the legal consequences when a donor, particularly one who has somehow already claimed a charitable contribution deduction (if that is possible), who then fails to fund the gift? I remember some time ago when it suddenly became common for Universities (like Northwestern) to sue donors who had made and then reneged on promised donations. As a university attorney I had a very nice CLE outline on the topic but I surely can't find it now. Still, I'm sure there is case law on the topic. As I recall the enforceability of the promised gift hinges on estoppel, but I could be wrong; contract lawyers and professors will likely have lots to talk about in the coming few years as donors who "promised" donations are forced by economic circumstances to rethink their promises.