Trusts Veer From Donors Wishes

This article in the New York Times reports on a trend of trusts that veer off of the wishes of the donors when there are no family members to oversee the trust, and the banks that held the trusts were bought by global banks.

Donors Gone, Trusts Veer From Their Wishes

By Stephanie Strom

Published: September 29, 2007

When Mamie Dues died in 1974, she left the fortune her husband, Cesle, had made in movie theaters in El Paso to a foundation controlled by a local bank there. The couple had no heirs and no other family.

"They lived modestly in a little apartment house and spent most of their time watching TV," recalled J. Sam Moore Jr., a lawyer who drew up their wills. "They took little or no interest in civic affairs, but they did feel strongly about this place, and they mandated that their foundation be concentrated on crippled children in El Paso, and in Texas more broadly."

Three decades later, however, the foundation's legal address is in Delaware, and a global bank, JPMorgan, manages it from an office in Dallas. While its assets have grown to almost $6 million, from $5.1 million in 2000, its giving has fallen sharply, and the local group that once decided who would receive its money no longer has a say in its operations.

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Donors Seek Restrictions On Big Money Gifts

Recent disputes regarding the actual intent of donors for gifts given long ago has roiled such institutions as Princeton, Tulane, and Randolph College in Virginia. Now, donors are banding together to get advice on how best to place restrictions on gifts so they are used specifically and narrowly.

This article in the Wall Street Journal by John Hechinger reports that a new Indianapolis-based Center for Excellence in Higher Education has been formed to advise donors on how best to restrict their gifts. We need to take heed of this movement, and not only be vigilant on the usage of the gifts, but also to be sure that the gifts are legally gifts, or if the restrictions on the gift negate the charitable intent.

Big-Money Donors Move to Curb Colleges' Discretion to Spend Gifts
By John Hechinger
September 18, 2007; Page B1

For generations, wealthy alumni have donated big money to their alma maters with near-religious devotion. But some blue-chip donors are no longer willing to give merely on faith.

In an initiative to be announced today, several philanthropists -- including Bernard Marcus, the billionaire founder of Home Depot Inc., and investor John Templeton, who made a fortune running mutual funds -- are launching a nonprofit that will advise donors on how to attach legally enforceable conditions to their gifts.

The new Indianapolis-based Center for Excellence in Higher Education aims to curb colleges' discretion in spending donors' contributions. The three foundations backing the center -- those founded by Messrs. Marcus and Templeton and the John William Pope Foundation -- have about $1.25 billion in assets and have made $585 million in gifts over the past five years.

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