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My Guest:
Doug White: Robertson v. Princeton
Doug White is the author of “Abusing Donor Intent: The Robertson Family’s Epic Lawsuit Against Princeton University.” He returns to Nonprofit Radio to tell how trust eroded between donor and university, and a $35 million gift from 1961 ended in a messy lawsuit. He’s got lots of lessons to share to help you avoid the same mess. df
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Oppcoll hello and welcome to tony martignetti non-profit radio big non-profit ideas for the other ninety five percent. Oh, i’m very, very glad that you are with me today i’d be thrown into cerebral ischemia if it came to my ken that you had missed today’s show robertson v princeton doug white is the author of abusing donor-centric the robertsons family’s epic lawsuit against princeton university, he returns to the show to tell how trust eroded between donor and university and a thirty five million dollars gift from nineteen, sixty one ended in a messy lawsuit. He’s got lots of lessons to share to help you avoid same kind of mess on tony’s take to roughly halfway through the next installment of the non-profit radio knowledge base. I am very glad to welcome back to the show and back to the studio. Doug white, author, professor, advisor to non-profits and philanthropists he’s on the faculty in the masters in fund-raising program at columbia university abusing donors intent is his fourth book you’ll find him at doug white dot net. Welcome back, doug, wait, it’s, good to be back in to see you again. You have to ask the question that’s on everybody’s mind though cerebral ischemia. What is that that’s? A well, that this week that’s that’s what i’ll suffer if i find out that someone had not heard this week’s show a cerebral it’s a form of a stroke. I say, since t mia’s had a sense that’s what it was, but i wanted to ask you, being an attorney and all, you probably come up with all of these terms. Yeah, well, we make the well back when i was practicing law now, we would make the things up there the way wood or we would defend against people who had made them up as if the slip and fall in aisle seven on the relish that caused it, and an approximate cause of the ischemia twelve years later, that that was there was actually a cause and effect relationship and that’s what we were trying to defeat it’s great to see things haven’t changed and that’s actually kind of a segue way to a lawsuit story. I don’t know sure that’s true and that’s why i don’t practice law any longer because i was not interested in the relish bill in aisle seven, but this lawsuit that we’re going to talk about is a lot more meaningful than then slip and falls and trip and falls. You. You spend your a lot of time thinking about ethics and fund-raising last time you were on, we were talking about your book around ethics, and this is donorsearch trust and loyalty. How were all these? How are all these related in your in your professorial authorship? Mind? Well, someone might accuse me of having a cerebral something else because of all of the mishmash that goes on in my head on this stuff, but i won’t. But really, i think that there’s a lot to think about in the nonprofit world that we don’t otherwise think about, we think about fund-raising and we think about boards and all of those things are important, but i’m tryingto get a handle on what society does with its non-profit sector and how the non-profit sector responds back, and so it takes me to these corners that are really weird, and in this particular case, it took me to a story that had something to do with trust and a lot of money and a huge university. And the question is, how could someone accuse princeton of doing something so egregious and that’s? Not an easy question to answer. In fact, when i went into this story, i didn’t think princeton was really all that guilty of anything. Ah, okay, because as i read through the book, i sensed you trying to be objective, but in the end, i was left with the sense that you felt princeton really had wronged this. The robertson family. You want to tell the end right now? I’m trying to get people to buy the book here in the story. There you go, there’s. Going to be oil or alert, we only have an hour together. There’s. Lots of information that people going by the book around because you were just going to work or school is going to touch the were scratching the surface that’s right in a mere hour. The book is very well worth buying. Nine i’m just kind of yes, i know your last here, but now that was the that was okay. We’ll get into the details of that. But i think it’s sort of a tease, you know? No, no, it is that was kind of what i was left with, and two thousand six i had finished the book called charity on trial and was interviewed on television station in washington, and somebody brought up the princeton case because i had written about it a little bit, it hadn’t gone anywhere. It was still in the lawsuit stage, and the interviewer asked what i thought of the princeton case, and i thought that princeton had a pretty good case to defend themselves on. I said that at the time, and i felt that for a long time because i like i’m sure many many people feel like a place like princeton really has its act together and is a pretty good place. And i i say that knowing that it’s, i still feel that way. But there were issues that i discovered along the way that i felt really made them look bad. Okay? Okay. And we’re going toe t c we’re going to follow your evolution. Okay, you’ve, you’ve you’ve come, you’ve come around. Your thinking has evolved. Let’s, let’s not tease any longer. This this goes back to ah nineteen. Sixty one gift from charles roberts heimans set up a little bit for you. Charles robertson, co founder of the great atlantic and pacific tea company, the mp supermarkets nineteen sixty one gift to princeton university. Well, let me just do a little bit of a nuance on that. Exactly. The wife, marie robertson, who is the heiress of the mp fortunes. She funded it, right? She actually tent. Technically. Did fundez yes way say that there were donors, but technically, there was one donor, and that was marie robertson. Okay, but charles robertson, her husband was such a large player in the gift. You’re gonna hold my feet to the fire on the details. Well, you’re an attorney, and i can’t well, i was i was that’s the second time now you’ve used i’m not an attorney anymore. Oh, you’re uncovering, attorney. Yeah. I mean, i do fund-raising more than i do. Attorney work. It plays a part, but i didn’t say it disparagingly. I say it with no i d s marriage, but but you should hold me to the fire because you wrote a book and i’m glossy on the, you know, ignoring details. Okay. Yes, go ahead. Marie robertson was actually the donor. Yeah, technically, but we think of them as donors and that’s. Fine. She was the heiress of the mp fortune and her one tenth share of the stock when it became available to be invaded after the trust was dissolved in nineteen. Fifty seven was about ninety million dollars. She got ninety million dollars one day from the trust. And charles, her husband, her second husband. I was an investment adviser and he knew two things. One is not only should this stock portfolio within the family be diversified, he also did not have any faith in the management of the mp at that time after the original. People died off. He didn’t think it was going to go anywhere. And he was actually right on dh. You could predict anything, but in this particular case, he was right. The mp actually filed for bankruptcy just a few years ago. I don’t know it’s status today, but it did have a lot of difficulty. Miss stock did go down, so they were right to a diversify. And also the other part of that in terms of wealth management planning was to make a charitable gift to save on huge, huge taxes. The marginal tax rate at that time was ninety one percent. So this brought them to the woodrow wilson school at princeton university. It did. Ah, charles was a graduate of princeton, so let’s get that out and they were both very interested. Or he was really the intellectual driver behind the gift and it’s purpose. He was very interested, but they both were. They were both interested in international relations. This was an air of that. Today we find it hard to even think happened. There was an optimism in the united states, and there was a lot of challenge because of the height of the cold war too. In nineteen sixty one, kennedy had just been elected. And so there was the sense of america. Khun do it. There was this idea that we were going to go to the moon, which we did. There was this idea that we could almost conquer anything which we didn’t. But there was a sense, this vibrancy and the robertsons felt that it would be really great if we could go to a really great school like princeton, the woodrow wilson school which existed before the gift, by the way, and have people go into the foreign service of the government to go out and spread american values, not in any political sort of away or ideological sort of way other than democracy, but do it through the idea of foreign service through a peaceful way. And so the idea was to get students who were at the woodrow wilson school graduate program to then go into the foreign service. The negotiations ensued, of course, a lot of talk about what the donor’s objectives were and how to achieve those objectives of a sze yu put it, you know the broad goal of strengthening the foreign service in the united states and using the doing that through the woodrow wilson school, their phrase was strengthening the united states government pretty clear all it’s clear, but it’s also abroad. The specific phrase that i think we are probably going to have to talk about a little bit is the phrase particular emphasis, the idea that students would go into the foreign service area or some branch of the government that had dealings with the foreign service and that the school would put particular emphasis that’s in the document on putting those students in those positions. Okay, we’re gonna take our first break onda of course, doug white stays with us. We’re going to keep talking about the the evolution of this, the the gift and the lawsuit and the lessons of course, that’s, you know, that’s important that we want to leave you with takeaways so that you can avoid something like this may not be epic in your in your case, but could still be very seriously want help you avoid problems like princeton had with his donors. So stay with us e-giving didn’t think dick tooting getting ding ding, ding ding you’re listening to the talking alternate. Network waiting to get you thinking. Dahna cubine do you need a business plan that can guide your company’s growth seven and seven will help bring the changes you need. Wear small business consultants and we pay attention to the details. You may miss. Our culture and consultant services are guaranteed to lead toe right groat for your business, call us at nine one seven eight three three four eight six zero foreign, no obligation free consultation checkout on the website of ww dot covenant seven dot com are you stuck in your business or career trying to take your business to the next level and it keeps hitting a wall? This is sam liebowitz, the conscious consultant. I will help you get to the root cause of your abundance issues and help move you forward in your life. Call me now and let’s create the future you dream of. Two, one, two, seven, two, one, eight, one, eight, three that’s to one to seven to one eight one eight three the conscious consultant helping conscious people be better business people. Dahna you’re listening to the talking alternative network. Hyre welcome back to big non-profit ideas for the other ninety five percent. I’m sorry, i can’t send live listener love today directly live, because we’re pre recording today. But does you were listening live? I send you my thanks. Thanks for listening. And, of course, podcast pleasantries to those of you listening everywhere else but live very glad you’re with us. The ah, now we have an hour, but we only have an hour. So we have to fast forward a little bit now, too. How things started, teo devolve from, uh, charles and marie the parents to bill robertson, the son of charles and marie. Things started to break down over time in the in the relationship. One of the interesting aspects of this case is they started to break down a lot sooner than princeton had been saying. Charles robertson himself was very upset. Within a few years of a gift with the lack of results at the school, he had done a lot of research on what the school could do. He had talked to important government officials before setting up the foundation. And by the way, this was a foundation to support the program at the woodrow wilson school. Today, it would be known as, ah supporting organization back in nineteen sixty one, they didn’t have that, but that’s what effectively acted as and so he was on the board as well as two other family members. So there were three family members and for people from princeton on the board of this foundation called the robertson. Foundation that’s important, i think three family members for people from princeton. Absolutely. That was important for a lot of reasons that turned out to be one of the reasons that there was eventually a lawsuit, but it was also important for the irs to give its blessing to the charitable stature of this organization. So charles robertson knew that princeton would have the four votes they would have control. There was no real question in his mind, but he also wanted to have the families input too over the years over the generations. And so there was this balancing act that they were trying to accomplish, and i think they were all going into this in good faith. There’s no, in my view, any question about that? At the point, the gift was made, but there was always some question as to what the school was going to do. In other words, this was going to be a great program for international relations, and it is today, and i want to be clear about that it’s one of the best in the united states or the best in the world. But the gift was made in order to make room for students to go into the foreign service. That was the whole point of the gift. That was the point of the gift. It wasn’t to make the woodrow wilson school great. It was to put people into the foreign service or in the foreign relations positions in the united states government and that’s what wasn’t happening. And only a few years after that, charles robertson started to look at this and say, what’s our progress, and over the years, i don’t know the exact figure right now, but up until twenty or two, i would say perhaps thirteen to fourteen percent of the students actually went into the government, which was an abysmal failure from charles robertson’s perspective and so on. He was upset from pretty pretty much the beginning, and i got my hands on documents that proves this. This was not something that bill robertson is inventing ah he’s able to show me letters that his father wrote angrily. I mean, there was a lot of emotion in these things to show that he was very upset with the progress of the woodrow wilson school bill robertson comes into the picture because he’s young at this point in nineteen seventy two i think he graduated from princeton himself, so he wasn’t really old. He came out of the board after one of the other family members went off and took basically his father’s place on the board on his family portion of the board in nineteen eighty one after his father died. And so bill took over that mantle of keeping a sharp eye on the progress of the woodrow wilson school graduate program and continue to be unhappy with it. So it did go from charles to bill, but another dynamic here that we don’t often times take into account. What i tried to describe in the book was bill’s intense loyalty to his parents and in this particular case, his father, he felt that his father and mother put this gift the hugest gift basically that had ever been given to a university to that time. And he felt that things weren’t being done correctly and and his mother, too, was very there’s. Ah, something. And you say in the book that that bill feels very strong that his mother relied on on princeton and this gift up until her death? Yes, on dh. Trusted them? Yes, yes, this trust was a big deal, and trust is a big deal in all of our lives, and i don’t know that we really analyze it well or feel a about it their way we might, but i feel strongly that both bilich excuse me. Both charles and marie were hoping for more from this gift, and they were trusting princeton probably more than they should have been, but that’s another issue point is that by the time bill took over his seat on the board, things were not improving. And so bill kept up that as i say that that i on on the progress, that isn’t what triggered the lawsuit. But that was always ah, thorn in the side of the of of the meetings on dove, the progress of the woodrow wilson school, they were not happy on dh there. I don’t know that there was based on what i’ve seen. I can’t say that i would actually say that there would be a point in that forty year history where they were ever happy. No. Okay, um, i have my favorite character in in the in this epic lawsuit, but i’m not going on that i want to hold that, um, print co-branded in investment committee plays a big role here, and i think that has a lot and has a lot to do with the donor university relationship. Print go. You’re right, it’s the princeton investment company, i think. Oh, company. Yeah, those committee no close close. Not not bad. I’m gonna check you on that. Okay. Okay, go ahead. Check me out. Okay. While you’re doing that, i didn’t bring the book with me, so i never bring the book because i don’t want to be, you know, on page seventy four you said all right, i’ll have to check later. This is the problem. Open book tests in high school. That’s why they don’t want to go ahead. All right. So the idea of going into a broader strategy for investing was anathema to bill, as it would have been to charles. In fact, part of the original document talked about how investments had to be put together. The idea was that print cho had been established a few years earlier, and the princeton and down, which had gone into several billions of dollars. At that point, i was going to be managed in a more modern way from the more traditional life and bill was away in the early eighties. Now we are in the early eighties. Yeah, we are actually. And charles did not want to get too risky with the investments, and neither did bill and bill, by the way, grew into a financial investment advisory capacity in his own right outside of this. And so he had some chops when it came to investing, and he also didn’t want to go to what became a pretty big norm at university investment houses. And that is to say, by the nineties late nineties, especially the idea of alternative investments was very, very popular, and the thieves were hedge funds head from investing foreign in foreign companies. Yes. Now every every i have to say that what i was in this business of the in the investment business for charities, i understood that there were lots and lots of asset classes and and that’s fine, the way we should always be on the cutting edge of understanding how finances and investments work. But they’re became a time when everything was going up and this happened throughout the two thousands to ana and what became really popular was what we call alternatives or the alternative investments like you say hedge funds and other things. And bill was really against that idea and print cho was going forward. He went down to print go because they were in another office and said, show me around and tell me what’s going on, and he was just not impressed with the idea of alternative investments and, quite frankly, again oppressions being what it is in twenty late that’s exactly what brought down these university endowments? In fact, princeton was so reliant upon investments they had about fifty percent or a little bit more in their endowment devoted to alternatives which, when i was in the world of old investments back in the early nineties, we would think of two or three percent of a large and and so it got turned upside down, and that the tension was whether print coe should be investing the foundation assets along with the university endowment or and in the eyes of the roberts of bill robertson that it should not print go should not have control over the investment exactly. And that’s what triggered the lawsuit that issue, if you’re looking at one moment where the decision was made to actually file a lawsuit, it was when bill robertson finally got fed up after the after the board for two three voted to go to print cope, put the assets into print going by the way that thirty five million dollars had grown to about eight hundred million dollars that thirty five million dollars had grown to about eight hundred billion dollars by two thousand. Wow. Okay, that’s. Excellent perspective. All right, now we’re in the lawsuit. What else did the the lawsuit alleged besides the investment? Misappropriation? Well, not miss probation, but there were a couple of expenses and things like that. That right lawsuit alleged what happens? And you probably know this much better than i. But i learned this a little bit more during the course of writing the book. There was a complaint filed. We feel something is wrong, x and then there’s a response. And then in the process of looking at the issue’s, the plaintiffs have an opportunity to go through what’s called discovery. And in the process of that discovery, they discovered a lot of things that they didn’t know beforehand, so the original complaint had to do a lot with print go, and it also had a lot to do with why students were going into the foreign service. But during discovery, the plaintiff’s found that a lot of the money wasn’t being spent well, either. For example, people excuse me, other departments at princeton were getting money from the foundation, and those departments weren’t really helping with the woodrow wilson, sir? Yeah, the school princeton defends that and says, i’ll just use the phrase they use academic freedom. They say that academic freedom allowed them to make all of these decisions and bill’s perspective, as well as as well as the attorneys. Of course, for the family was that academic freedom, while it’s a cherished concept and we really want to make sure that we never really violated it still has its limits. You can’t, for example, well, maybe you can. We don’t know this never was adjudicated by judge or a jury so it’s we’ll never really know. But there was this this comment during the depositions, where the attorney for print for the robertsons asked one of the president’s what? What kind of expenditure would be allowed. And the person said, well, almost anything. And the attorney said, well, how about the hiring a basketball coach? Would that be allowed? And he said yes, oh, my yes, oh, my that’s a university president that was the university. Yes saying this i forget whether it was the president or dean, i think it was the president and he said yes, because if we need to hire someone at the woodrow wilson school who likes basketball or whose husband or wife, teacher, our coaches, basketball or some connection and that brings that person to the woodrow wilson school, then we will spend that money on the basketball coach’s salary. Well, you can imagine how the robertsons would react to that and understanding that there is an idea, a fundamental, cherished ideal of academic freedom. We still are violating something very fundamental when that answer comes to the fore. Um, now listeners know that we have jargon jail on tony martignetti non-profit radio, but i didn’t want to put you on a very simple, you know, the complaint that’s just i’m going to get you out of jargon job because i’m glad that you’re back the third time on the show so an attorney is going to get me out of attorneys, do it all the time when we’re not all they are not. I’m not practicing law. I am not practicing law. Is that explicit? If i made that clear, those who do practice law often are getting people out of prison. It’s one of the noble or things that we do is restore someone’s freak that they do. They do pronoun trouble, eyes restore freedom to those erroneously held incarcerated. So, yeah, the complaint is just that’s the way you you have a complaint. So that’s, how you start a lawsuit and discovery is the exchange of all kinds of documents. And in this case it was e mails and letters metoo certainly notes of notes of conversations you wantto there was a lot. There was a lot in there that, as you said, the robertsons discovered that they hadn’t known about what was going on with the money in this discovery process. Thousands of pages. Yeah, thousands of pages. Not all of them were stingingly terrible now, of course, but a lot of it’s, very mundane. Very, very monday. And you just have to sift through it because you never know when that nugget is going to pop out. But, yes, they found that this money was being spent all over the place at princeton and princeton will say, look, a woodrow wilson school is a great place. Okay, well, there’s, no question about that nobody’s arguing that but what we’re talking about is the intention of the donor and the document that was signed in nineteen sixty one that princeton agreed to, and so that the woodrow wilson school is a great place is true. But your relevant to this this question, the other thing was academic freedom. We can spend money pretty much however we want to. And the robertsons wanted to pull back on that. The another big issue in this was the how the robertsons legal fees were being paid and that was being paid through the banbury fund. Another robertson family foundation let’s touch on that. Just, like, got it? Just a little. Okay. Princeton didn’t want that to happen, and the robertson said that they could do it. They got opinion letters from their attorneys and also had some precedents from the irs, both in private letter. Rulings and revenue rulings. So they were, i think, firm ground. But princeton still fights that battle today. They still say that it was improper for the banbury fund, too. Pay the robertson legal expenses. But from what i could say they were they were in a good place to do that. The robertsons work. Okay, um, starting to hint at some of our lessons for later on there was issue in the complaint also or in the in the subsequent complaint after the discovery around financial transparency. Yes. And disclosures that had not been made to the yeah, robertson’s family. Towboat robertson. So not only do we have these money, these dollars being spent their being spent without the family’s knowledge one was a building that was being constructed almost entirely from the robertson. That was wallace hall. Yes. And if you ask bill robertson what the big reasons he went to court where wallace hall was one of the three and a large part of that was they were not told this was taking place. So in other words, they took the position that not only could they use this money outside of director connection to the woodrow. Wilson school they didn’t have to tell the family about it for two three days. This warner hall. I’m sorry. While us all was not part of the woodrow wilson school, not at all. It was not so to bill robertson. This is as far afield as hiring the basketball coach and paying for it exactly. He was very upset about that, and i don’t blame him. I mean, there were a lot of places where princeton didn’t have toe go to a lawsuit that could have done so much, and we’ll get to those in lessons later on. But when wallace hall came about, bill was livid. Yeah, well, s o you know, the institution does bad things, and then it covers it up and that’s the that’s, the financial transparency that was that was lacking and became part of the the complaint. Um ah, we need youto hang tight for aa for a couple of moments while i express my gratitude. Teo, the show’s sponsor, which is generosity siri’s and they sponsor of a host multi charity five k runs and walks peer-to-peer fund-raising and its generosity siri’s that makes it possible for me to do the show. And bring outstanding guests like doug white to talk about something that, you know, maybe you have a vague recollection about it if you’ve been in fund-raising long enough, but whether you, whether you recollect it or not, there are incredibly valuable lessons for relationships between donors and charities that come out of this. This epic lawsuit between the robertsons and princeton university and generosity siri’s makes it possible for me to have doug and host him and have him explain what went into this and what we can all take away from it. Generosity siri’s a sigh said, hosting five k multi charity runs and walks so your charity becomes a charity partner with generosity siri’s and participates in one of the events that they do throughout the country. They’ve got them coming up in new jersey, florida, atlanta, georgia, new york city, philadelphia, toronto you can just pick up the phone and that’s the way i like to do business. I like to pick up the phone and just see what things they’re about. I could talk to dave lynn he’s, the ceo. They’re at seven one eight five o six, nine, triple seven seven one eight, five or six, nine seven. Seven, seven, which i prefer to say. Nine. Triple seven if you prefer the web, of course, they’re on the way. If you don’t have to pick up phone’s, just that’s. What i like to do business, um, but they are at generosity. Siri’s, dot com, if you if you prefer that way. The non-profit radio knowledge base i am putting shows together bye topic to create a knowledge base and so that when you have a need, the knowledge base will be a resource that agra gates, all the advice of our expert guests over many years of doing the show this week is bored fund-raising that is a huge topic that causes lots of headaches and lots of frustration among sea level people, in charities and among staff and charities and among boards in charities. Um, so check out the video that i have this week on the links to the many interviews on that topic board fund-raising i’ve been collecting shows and doing shows for very close to four years so there’s, plenty of material and bored fund-raising is certainly one of the topics that has come up many times for for guests, and that is tony’s take two for friday, ninth of may nineteenth show of the year you will find that video and and the links on my site at tony martignetti dot com the great you’re still here, right? I am cool, i’m glad you don’t know what i was impressed with that that was very good. Thanks. Sponsors. Exactly due to their generosity, siri’s is helps. Helps fundez show. Um, so we have now this lawsuit and the discovery and the and the amended complaint based on what the robertsons learned through discovery. And this lawsuit is on for six between six and seven years. I imagine the relationship was it was pretty damn difficulty between the foundation board and the princeton university. Ah, the administration and the people who are on the board from princeton university. They have to get together for board meetings. Excuse me? Yes, they do. And the bill, sister catherine ernst described it as having a boardmember and then an attorney, then the boardmember and then attorney all around the table. And not only the family, but also the princeton side of the board. It was very tense. They describe how in the early days when charlie was alive, that the relations were very good. There would be lunch at the president’s house. There would be a lot of camaraderie, even though problems were developing. The relations were pretty good by the time the lawsuit comes around. Nobody’s talking. Anybody aboard? Yeah, board meetings. And it became the antithesis of what? And again, i teach board governance at columbia, and we talk about the need for transparency and fluidity and, you know, trust. And none of that was was was there during this lawsuit so it’s very, very tense there, even they were actually having meals in separate rooms. That’s, right, they family released in the same family. Boardmember zand, the princeton university board members would would have lunches in separate rooms. That’s, right? They did need an adult to come in and take the it was. They ended up doing that for the settlement, but at this point, it was just, i can’t imagine how tense that had to be. Yeah, and over six, seven years, yes, right, yes. Okay, um, let’s. Bring us to the settlement. Twenty eight ah lot of things are going on. First of all, it’s true that the robertsons we’re running out of money, even though the banbury fund was funding the lawsuits, the law ofthe fees added up to about forty five million dollars on each side, which is an incredible about the money and even a place like the banbury fund was starting to feel that now, if i’ve been a part of those teams, i’d probably still be practicing law. Yes, i would have been. The buildings are so easy when you’re in a lawsuit, but i just never got that far. I stuck it out for two years, and i never made it to this level. Well, the judge and retired, the one that everybody bonded, teo in light and respected. He retired. The judge’s clerk left to go work for the princeton lawyers, which was interesting. The new judge could only give it one day a week. And that was maria psychic. And she was only going to be able to do it for one day a week, which stretched the lawsuit out even further. Give doug a car, their problems. And so there was a lot. Of delay and and i get this even though we kind of make fun of this from time to time, that even though there was a delay and there was a slow down, the work still had to be continued. The law fees were continuing. And so the question of being able to pay for this was a very acute one for the robertson family. On the other side of the coin, the princeton investments were going south because the crisis was taking place. And they were, as i say, and alternatives and so they were having a liquidity problem. I think they probably only source of liquidity. Most fat during that time was probably tuition paying parents was just a very tight time. They might not acknowledge it that way, but that’s pretty much how i see it. So they were both ready. I think, to talk settlement. They had tried beforehand they didn’t get anywhere. Bill originally wanted to take the entire endowment away and put it somewhere else. And that would have been a really riel problem for princeton, because if for no other reason, it would have been a real blow psychologically to this story, i really? University. I get what they wanted to do there. So they were going back and forth. And the question was, should we force the university of the repay all of these dollars that they had misspent, which could have been an excess of about two hundred billion dollars back into the foundation? Or can we just take the foundation away? Or can we split away from the foundation and they wanted independence? They wanted to say, okay, we want money to go do our own thing, that is, to say what my parents were doing, who his parents were doing, and the and princeton really didn’t want that, so they said, okay, what we’ll do is we’ll consider chopping off some of this money and giving it to you if you let us keep the rest of it and you guys go away and that’s basically, what happened? They did bring in an adult david girlfriend from milbank tweed who came in and his whole approach was saying not to say who had the better argument legally, his approach was, how can we get out of this mess? And i think he was a good voice. He was not. Part of the litigation, and he was a good voice to be brought in at this time, and he actually did the settlement. He was very good. And the settlement wass that princeton would reimburse the banbury fund the forty five million dollars for the legal fees. And in addition to that, over a period of time, the university would pay fifty million dollars to a new foundation. It’s called the robinson foundation for government. And it now exists it’s, a family foundation and has its own work and does what it’s predecessor was supposed to do that is to put students into the federal government just but it is completely independent. Totally invested in university. Yeah. And then the rest of the money, which probably added up to around six hundred fifty or seven hundred million dollars. Because during that period of time, during the crisis, the endowment came dahna shade. But let’s say six hundred million then was left. I don’t know exactly. The robinson foundation, by the way, was dissolved the original one. And so the money that was in it and was left for princeton went into its general endowment specifically for the woodrow wilson school. And today the robertson family does not have anything to say about how that money is being used. There is a complete divorce. Okay, i think that can bring us to ah, something’s that charity’s can can take away. Um, i still have a revealed my favorite character, but we haven’t talked about that person. Um, agreements, should we start with ah, i mean, this was all went back to the to the phrase, um particular emphasis. So do we, which was in which was in the original document creating the foundation? Yes, let’s. Talk about what? What level of scrupulous nous we need to have around agreements with donors. Let me preface it by saying the this this conversation, this part of it right now has a lot to do with understanding that this lawsuit was a story and it’s true and it’s big but israel reason for being important is that almost any charity and almost any donor can get into this bind. So it’s not just ah, large family or a large university. Any endowed gift or any restricted gift really, really needs to be put together with what i would call the lessons. Yeah, you want to bring us, we could easily be talking about a ten or fifteen thousand dollars gift easily, easily and that’s really one of the big messages here, this isn’t just about princeton it’s got a lot of interest, but it’s not just about princeton and so donor-centric aridjis both have to be aware of this when we say when we use phrases like in with particular emphasis, it has a meaning, but it doesn’t have an absolute meaning doesn’t mean that one hundred percent of the students are goingto go to the federal government, but it also doesn’t mean zero percent or ten percent. So we have to have an understanding you and i about what particular emphasis means if it were seventy or eighty or ninety percent, i don’t think charles robertson would have had any problem. I think even if he were sixty or sixty five percent, part of the problem was not just the results, and this is another thing they discovered was that princeton never really cared whether the students we’re going to go and the evidence of that was they never asked on the application whether they were interested in going into the federal government. So there was that part of the equation, so and i think you can relate to this as an attorney, we sometimes think of the laws being black and white and here’s what’s, right, and here’s what’s wrong. But a lot of phrases we use our are vague on purpose. They they’re meant to be because we can’t assign a value our ah specific numeric value to the word emphasis. We just can’t do that. And yet, it’s an important idea in an agreement. So if a person is making an agreement today, one lesson is too if you’re going to use that kind of a phrase, define it a little bit more than they did. One one word that gets us into trouble, i think in fund-raising agreements and that is the word in perpetuity of the phrase in perpetuity. Because in perpetuity has has a meaning if you look it up. It’s very clear what that meaning is it means forever and forever has a meaning. And so, by definition we cannot put into legitimately into an agreement in my view the word perpetuity because we cannot know what’s going to happen forever. So we have to be more careful in crafting the language that we’re using. I once made a gift to my own high school. This is a in the nineteen eighties of deferred gift. Where’d you go to high school exeter, phillips, exeter. And it was back in the day when pulled income funds were popular. You probably remember that yourself. None of our listeners will. There were there was a thing it’s, an antique drug in jail. Again. Well its way. But we have to define it’s now an out of date. Really, uh, life income gift. A method through which donors got variable income for for their lives. And the variability became a big issue when interest rates were declining and the varying the variations were all down. And these have pretty much falling out of favor among among non-profits so that’s enough. So income funds. When i was doing the agreement, they said, and i want to do honor my english teacher and they said, this is back in like, nineteen, eighty four they said, you know, this going to sound weird, but we might not teach english forever, right? I thought, how is that possible? But it may not be possible. But it was also not conceivable that we wouldn’t be riding horses forever, so we had an escape plus saying that if this ever did happen that they be able to use it to a purpose as close as possible, something something that deals with ian practicability of yes, continuing the gift yes, and i’m tryingto bring the send tryingto respond to your question about how donors can and charities khun b take steps to avoid what happened to princeton so that we don’t just use words capriciously. Um, we just have about a minute before a break and there’s certainly board implications here, too. I mean, the princeton board reviewed the documentation and probably was involved in in a good degree and in the negotiations board oversight of gift. Yes, this is a good example of that. Now, i don’t really fault the board at princeton to too much because it was nineteen, sixty one and not twenty fourteen, and so we’ve learned a lot in the last half century about board oversight and so forth, but that said thie gift was basically shoved through. It was a last minute quick kind of a thing had nothing to do. With there at the time, current capital campaign and the president really did not have the fullest discussion with the board about this gift, and they should have. So board oversight of that process is really critical. We all go out from the break, and when we come back, doug and i will keep talking about the lessons from this epic lawsuit robertson v princeton you’re listening to the talking alternative network. Have you ever considered consulting a road map when you feel you need help getting to your destination when the normal path seems blocked? A little help can come in handy when choosing an alternate route. Your natal chart is a map of your potentials. 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Big non-profit ideas for the other ninety five percent. As we make our agreements more specific and and defined terms as you’re suggesting, we can actually get into trouble because the specificity now binds us two teo, try to predict what’s going to happen and try to predict what issues are goingto a result. So there’s a there’s a balance between specificity and flexibility there is, and when i was saying earlier that we need to be more specific, er not use words capriciously, you’re right, i had that in mind to that there is a balance and it’s there’s always going to be tension. And so the question is, how do we avoid this kind of a thing going into the future? And one of the things that you can avoid has nothing to do with the agreement. It has everything to do with relations. If princeton had done so much differently, this wouldn’t have gone to where it went. But it was the lack of trust, the erosion of trust over the decades that really set the stage for this. Then you can go to the agreement say you’re not doing this well if you have the trust going on at the same time, you don’t need to go to the agreement, to say you are or are not doing something but that’s it so that’s probably the best lesson that anybody can learn from a charitable perspective anyway, to stay in touch with the airs at the donors and the heirs forever. This is an obligation, and if you don’t feel you can do that, you don’t feel you, khun obligate your success is that the organization to do that, then don’t promise to do that that’s part of the deal here and plan giving when i was in plan giving, doing these kinds of things and talking to you too plant giving directors, i would say you’re you’re actually making an agreement here that will go on for well past the time you’re here, and probably perhaps well past the time you’re even alive. So many generations of successors after you are going to have to do what you’re agreeing to do today, keep that idea in mind when you make these agreements and this particular agreement, nothing was going to erode the idea of a federal government or the need for foreign relations, but still there could have been mohr a trust and more. Specificity, i think, in the agreement, although i don’t think the specificity was the issue here, i think the idea was pretty clear, i mean, with particular emphasis might be a vague term, but it does have enough of a meaning and enough of an understanding by people who consider the table to know that thirteen percent just doesn’t cut it. You know, you know, the good communications and keeping in touch, and in this case, there were there were different presidents who at any time i thought when, when there was a new president, he or she could have said, you know, we’ve made some mistakes in the past, obviously i was not in charge then, but here’s what here’s, what happened and here’s what we’re gonna do, teo, make sure that this doesn’t happen again, that humility is so crucial, especially in a non-profit i can understand boisterousness from ah for-profit especially if it’s a big one, but at a non-profit there’s this extra special place that non-profits haven’t talked about that in the other book, the non-profit challenge where that humility plays a large large role or should now, just so you’ll know, since this book was published other organizations, air writing reviews and trying to talk with both me and princeton. Princeton refuses to talk about it. They give the same press release that they give that they gave after the settlement. They do not want to acknowledge that something went wrong. How they could possibly agnostic. Now i can understand them having a defense, but to say they were totally in the right, it blows my mind, you know that? Yeah, that sounds like lawyers giving advice on driving the decisionmaking vs people who are more interested in the in the long term relationships with donors and alumni. That was paul volcker’s perspective. I interviewed him because he’s, a princeton alum, and he also had a perspective on this situation at the woodrow wilson school. And he was complaining about the woodrow wilson school separately and before the lawsuit ever came, so he was doing it entirely independently. And when the lawsuit came around, he told me, i think the lawyers are driving this. They’re saying, princessa can admit to nothing but i’m thinking, okay, i get that it’s not good, but i get that. But here we are, what, five years? Seven years. Six years after the settlement and they’re still saying we didn’t do anything wrong. Is bill robertson willing to talk now? Yeah, bill’s bill’s going to be speaking with me up in boston next week? Oh, what could had bill roberts instead of you? You could have that would’ve visible the name and the lawsuit instead of the guy who just follows it later on in the gundam maybe it’s somehow it’s done now, right? Alright to settle for this on second best. Okay. And so, as we are crafting these agreements again, the board’s role in reviewing agreements whether whether it is appropriate to buying this organization forever in perpetuity, or should we stop short of that and the board is really the last step to that could raise a red flag for the organization. It is, unless you can come to some agreement as to what in perpetuity means, as they did at the a museum of ma metropolitan museum of art a few years ago. When philippe de montebello said, we think in perpetuity really means seventy five years on the donor agreed to that. Well, that’s ok. And this is the definition. There was a definition, right? So in perpetuity didn’t really mean what it means in the dictionary. Fine, but yes, you’re right. I think the board has to be very conscious of that. My favorite cara doctor, we didn’t talk about her, but you dedicated the book to jessie lee washington. I did, i don’t want to. I’ll let you explain, but we just have it. We just have a couple minutes explain the crucial role. Jessie jessie was an employee of the university was asked to look into endowments at the divinity school and found some irregularities and did a report, and it was put away for a while. Ah, then she left on dh. Then the lawsuit became really big, and she said, you know this? What i was working on in the divinity school is very similar to what the lawsuit is alleging. So she came out and went to the lawyers for princeton with seth lap ido and said, i have a story to tell you, and when she got on the phone, seth said, we’ve been waiting for you to come he don’t know who it was going to be, but he figured there would be some other person in princeton, who would be familiar with this activity that princeton was doing in the endowment accounting and she really represent she she, i think, was very courageous. She put her reputation on the line and said, i am willing to go on the record to say what’s wrong here, and he dedicated the book to her, and i did that was so touching, and i think she’s well, she’s, my favorite because i believe that most people want to do the right thing and she’s a perfect example of stepping forward, being courageous the way you described most people in non-profits and donors want to do the right thing. I think you’re right. I know you’re right. Doug wait, author, professor, advisor non-profits and philanthropists. He hangs out at columbia university teaching at the masters and fund-raising program. You will find him at doug white dot net. The book is abusing donorsearch intent. The robertson family’s epic lawsuit against princeton university it’s a very, very good story and very well told doug white, thanks so much. Thank you is good to see you again. Pleasure next week from the non-profit technology conference choosing the right cr m system. And also cindy gibson, our grants fund-raising contributor on what makes a strong proposal, our creative producer is clear. Meyerhoff sam leaving, which is our line producer, shows social media is by julia campbell of jake campbell. Social marketing and the remote producer of tony martignetti non-profit radio is john federico of the new rules. This music you’re hearing is by scott stein. He’s in brooklyn. You with me next week for non-profit radio. Big non-profit ideas for the other ninety five percent. Go out and be great. 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