Tuesday, May 5, 2009
The NY Times has an interesting article on the problem of how to deal with restricted gifts to charities as times change.
The story in Trinity’s case is a common one for these rifts. An economics professor (whom I don’t know) complained to the Connecticut attorney general’s office that money meant to support his endowed position was being misused. What had been $750,000 some 30 years ago had grown to $9 million. That was far more than was needed to pay one professor, so the college proposed using some of the excess income to pay for scholarships. The professor cried foul. . . .
Iris J. Goodwin, associate professor at the University of Tennessee College of Law, said a fund set up to buy typewriters 100 years ago should still buy typewriters today, even if there was little need for them. Most colleges would probably use the funds to buy computers, but doing so would violate the bequest, she said.
Few would challenge something like this, since typewriters are nearly obsolete. But when money is, say, for the study of Sumerian civilization, there is no legal reason not to finance it, even if the restricted endowment has grown to $30 million and there are only four students.
I've been thinking about this issue in another context recently. It seems to me that the trend in Wills & Trusts is to try to honor donor intent above all else. I'm not sure that makes sense -- I think that honoring donor intent is the right thing to do in the vast majority of circumstances. But we restrict property owners' ability to use their property during life all the time when there are important policy reasons to do so. I'm not sure why we shouldn't do the same after death.
UPDATE: I've had some e-mail correspondence with Iris Goodwin, and she makes the good points that (a) these types of donations are often important sources of funding of counter-majoritarian ideas, and (b) that it is hard to come up with any objective standard for when it is appropriate to depart from donor intent. I'm sure these points will be familiar to those of you who are more up on T&E issues than me.
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