Ethics in Fundraising – Fulfilling Donor Intent – The Garth Brooks Gift

The recent victory by Garth Brooks in his suit against an Oklahoma hospital for failing to build a women’s health facility in return for a $500,000 donation demonstrates that it took a big name donor to draw attention to this issue.  Mr. Brooks had alleged that the agreement occured at a meeting and the promise was made orally.  This is a fairly common situation in big dollar fundraising.

How much of a hospital facility will $500,000 build?  Answer:  Maybe a couple of hallways.  Hospitals are some of the most expensive buildings to build, except for, perhaps, high security structures for, say, the President of the U.S.  Ask any contractor who builds hospitals and you will learn that the building does not require HVAC, water, electricity and plumbing, but it also possesses complicated communications systems, a distribution network for gasses and other needed delivery systems.

Yet, non-profits do “sell” naming rights for large dollar donors and pick up the rest from smaller donors, with the promise of putting the donor’s name on a plaque.  One of the most impressive donor plaques appears at the Reagan Library, Air Force One Pavilion.

Reagan Library, Air Force One Pavilion Donor Plaque

Reagan Library, Air Force One Pavilion Donor Plaque, © 2009 Tahnya Ballard

Ms. Ballard’s college alma mater, Newcomb College of Tulane University had a similar controversy that played itself out in the Louisiana Supreme Court twice.  Unfortunately, Mrs. Newcomb, who donated the money to Tulane in the late 1800′s did not do as well at court as Mr. Brooks did.  Mrs. Newcomb was represented by her great, great, great niece and the issue was donor intent.  Mrs. Newcomb intended to honor her daughter by having Tulane, a university for men, set up a college for women.  (The Future of Newcomb College wrote a history of the litigation).

At issue was whether, after Katrina, Tulane University could unilaterally dissolve Newcomb College.  The Louisiana Supreme Court ruled that it could in a 4 to 2 decision.  Newcomb College is now no more.

The Association of Fundraising Professionals recognizes that fulfillment of donor intent is an important ethical (and possibly contractual) obligation in its’ Frequently Asked Questions (FAQs) About Fundraising Ethics:

8. Use of funds

Q. My institution wants to use a restricted gift for purposes other than the purpose for which the gift was solicited. Is this acceptable under the AFP Code?

A. No, it is a violation of the AFP Code to use monies from a restricted gift for a purpose other than the purpose for which it was solicited. You should advise your institution that such a use would violate the principle of honoring donor intent and would be a violation of the AFP Code of Ethical Principles (Standards 14, 15 and 16). You should strongly urge your institution not to allow such action.

If your organization wants to request a change regarding the restricted use of a gift, you must communicate with the donor about the gift. If the donor has passed away, the appropriate next step is to communicate with the donor’s family/living heirs. If no family members are alive, then you should contact the state executor to request the change. If none of the above exist, you can seek guidance from the courts or legal system.

Non-profits have to compete more now than ever for fewer and fewer dollars. More case law enforcing restricted gift agreements does put a heavier burden on foundations. We must all agree though, it’s only good business. There are so many ways to solicit donations that state that a gift is merely a part of an overall fundraising strategy.

Donors who want to ensure that their gifts go for the precise purpose they are donated want to get more than a verbal reassurance.  Anything in writing needs to be signed by someone from the non-profit corporation with authority to contractually bind the corporation.  Many hired fundraising professionals do not have this authority.  It requires approval from folks higher than that.  For very large donations, it may wise to seek advice from an attorney to assure that the promise is enforced.

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