Presentation Transcript

1. Bad Gifts Is there Such a Thing?Legal Pitfalls to Avoid Office of General Counsel Michele L. S. Krantz Senior Counselmlk31@case.edu368-4286
2. What’s the message? By being proactive, you can avoid these problems.
3. Basic Legal Principles To Meet Definition of a “Gift” Gift must be complete and irrevocable Gift may be for specific purpose but still must be in fulfillment of University’s charitable mission
4. Princeton/Robertson Litigation 7 years of litigation by Robertson family against Princeton for not following terms of gift Princeton incurred millions of dollars in legal fees and expenses Princeton had to transfer millions of dollars back to Robertson family foundation
5. “Huh?” Gifts Uncertainty in administration Obsolete language re principal and income might affect ability to invest and use
6. Gifts that Keep on Taking Non-cash gifts (equipment, collections, etc.) Consider: Maintenance costs Administration costs Liability risks passed along
7. Fisk University v.Georgia O’Keefe Foundation Fisk University sought to sell ownership stake in art collection Fisk incurs annual costs for display and maintenance of collection Gift had a “no-sale” restriction Tennessee Attorney General trying to block sale as violation of gift agreement Last week: Judge issues ruling that is compromise and neither side is happy
8. Gifts with Conditions Can they be met? How long do they apply? Out clauses?
9. Daughters of the Confederacy v.Vanderbilt University Early 1900s, Daughters of the Confederacy gave funds to construct dormitory, on condition that it be named “Confederate Memorial Hall”. 2002: Vanderbilt tries to rename the building Court upholds gift agreement
10. Kalmanv.Brandeis University Brandeis wanted to demolish a science building named for a donor 2009: law suit and . . . press coverage Lawsuit settles: Brandies agrees to name a new research lab after original donor
11. Montgomeryv.Tulane University Court had to interpret gift agreement that was more than 100 years old to determine whether Tulane had unlimited discretion Underlying issue: Could Tulane make changes as it deemed necessary to maintain its existence following Hurricane Katrina?
12. BrandeisandRose Art Museum 2009: Lawsuit to prevent Brandeis from closing Rose Art Museum and selling the art May 2010: Brandeis reverses decision to close museum but may still try non-sale options Oct 2010: Museum re-opens with new exhibits
13. Potential Conflict of Interest To be a gift, donor must give up control Self-dealing or personal benefit Gift should be separate from other business with the University
14. LB FoundationandUCLA Lawsuit alleging UCLA did not fulfill terms of gift agreement establishing endowed chair Additional facts come to light…. Were there “red flags” when the gift was made?
15. How You Can be Proactive Enlist help of Office of General Counseland Office of Planned Givingto address ambiguities Consider specifically addressing what will happen when “building is torn down” Include perpetual use language in gift agreement
16. How You Can Be ProactiveinGift Management Make sure university personnel using funds know terms of gift Maintain critical documents that might aid in understanding donor intent years later Consider “stakeholders” if gift needs to be changed If purpose needs to be changed, use proper process
17. Modify Permissible Use of GiftviaProper Process UPMIFA application to Attorney General for funds less than $250,000 Court approval Consent of donors (consent of descendants is not sufficient)
18. Questions?????????????????????????????????? Office of General Counsel Michele L. S. Krantz Senior Counselmlk31@case.edu368-4286