Thursday, April 14, 2011

Cruise Ship Donation

The Boston Globe reports today the resolution of a cruise ship donation gone bad.  Back in 2007 Alan Lewis, the owner of Grand Circle Travel, told the Boston Foundation he wanted to donate a 40 percent share in the cruise ship the m/s Paul Gauguin, a high-end ship used for expensive cruises in the South Pacific.  Alan owned the ship with his brother, Hank, and they were planning to sell the ship.  When they did, the Foundation would receive as much as $40 million!  Alan told the Foundation the money should be used for youth violence programs in the poorest neighborhoods in Boston.  Hank added 3 percent from his half of the ship.

Then after the economic downturn of 2008, the brothers began feuding over a failed merger of their two travel companies.  The Foundation, to protect its asset, and Alan, to protect his gift, entered into binding arbitration with Hank.  The decision was made public this week when it was filed in a Suffolk Superior Court.  The arbitrator awarded the Foundation $29.2 million for its share of the ship, plus $1.6 million in interest.

The article describes what it calls "the sometimes insidious efforts of the younger brother [Hank] to undermine what began as an odd but generous donation to one of Boston's premier charities."  According to the arbitration award, Hank had tried to buy the Foundation's share in the ship for significantly less than its value, knowing that the Foundation needed to see the interest within five years of the donation to avoid excise taxes.  Hank has appealed the award.

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http://lawprofessors.typepad.com/nonprofit/2011/04/cruise-ship-donation.html

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