Yale University: Finding New Purposes for Old Gifts in the Face of Budget Shortfalls

In the face of a $300 million budget shortfall, a team of staff and administrators at Yale spent the summer combing the university's endowment funds for gifts to the university that could be put to better use. 

The following excerpt from the Yale Daily News explains how Yale can "repurpose" a gift.  

In most cases, . . . repurposing is just a matter of convincing chairs and directors to shift costs away from the general operating budget and into their gifts . . . . When gifts are more specific, development officials search archives for the original donor agreements to see if the language allows for broader use, Vice President for Development Inge Reichenbach said.

If the language does not permit a more flexible interpretation, . . . department administrators and development officials may even ask the donor or the donor’s heirs for permission to use the money for purposes close to the original. This happens only rarely, or in under 10 percent of cases . . . .

When no donor is living, Reichenbach said, administrators may present their case to Connecticut’s attorney general. As long as they can show a donor’s original intention is no longer viable despite Yale’s best efforts, the attorney general typically grants such requests, she said.

The team discovered hundreds of gifts given for a specific purpose that had not been put to use for years, resulting in an accumulation of thousands of dollars in some cases.  Some of these gifts have become obsolete.  

Yale has encountered problems with repurposing gifts in the past.  Without properly repurposing gifts, however, Yale's $16 billion endowment fund cannot be used to meet current budget needs. The Yale Daily News concludes with the following on the matter:

If there’s anything Yale has learned from trying to use money from the numerous restricted funds in its endowment, it is that donors must be encouraged to give Yale flexibility in using their gifts, Reichenbach said. Not only will broader agreements with donors allow Yale to overcome its budget troubles, but they will also prevent gifts from becoming irrelevant.

See Vivian Yee, University combs gifts for new uses, Yale Daily News, Feb. 4, 2010.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this to my attention.