The Robertson Foundation Case: An Analysis - Essay Example

The Robertson Foundation Case: An Analysis This paper aims to analyze “The Robertson Foundation Case” in terms of its possible implications on fundraising and endowments in the future. The case would be evaluated based on the ethical context of fundraising. Introduction “Every organization needs money to survive, develop, and expand. Fundraising is vital to reducing dependency on some parent organization, or founder, or limited funding source. Fundraising is vital for an organization’s viability over time.” (Norton, 2003) The Robertson Foundation Case exemplifies relevant concerns encompassing fundraising and philanthropy. It provides an actual ongoing case between a prominently famous university and a philanthropic donor. The Robertson Foundation was established by spouses Charles and Marie Robertson in 1961 with the following specific objectives, to wit: “(a) “To establish or maintain and support, at Princeton University, and as part of the Woodrow Wilson School, a Graduate School, where men and women dedicated to public service may prepare themselves for careers in government service, with particular emphasis on the education of such persons for careers in those areas of the Federal Government that are concerned with international relations and affairs; and (b) To establish and maintain scholarships or fellowships, which will provide full, or partial support to students to each Graduate School, whether such students are candidates for degrees, special students, or part-time students.” Its initial endowment was worth $35million composed of 700,000 shares of A & P stocks. Problems ensued when Princeton University allegedly spent portions of the funds for purposes beyond those which were specifically mentioned. This was complicated by the fact that Princeton University was accorded full control of the Robertson Foundation with four members of the board from the university and only three members representing the Robertson family. In this regard, this case would be assessed in terms of its possible implications on fundraising and endowments in the future. Further, the case would be evaluated based on the ethical context of fundraising. Case Arguments A case was filed by the Robertson family on July 2002, represented by the four children and a cousin. Wooster (2006, 4) averred that “the initial charge in the complaint was that the university was illicitly commingling Robertson Foundation money with the university’s endowment and using foundation funds for activities that had nothing to do with training students for careers in civil service.” In fact, the following allegations were noted: (1) “whether or not the “public service” President Goheen referred to is the same as “government service”; (2) the endowment, previously managed by Essex Street Investment, was planned to be managed by PRINCO, an organization managing Princeton’s investments; (3) withholding of current financial information to the foundation board; (4) excessive charging of overhead; (5) defrauding other donors and covering up misallocation of funds; (6) diverting funds for purposes other than intended; among others. On the other hand, Princeton University, tried to defend itself by stipulating the following, to wit: (1) the Robertson Fund could not be transferred to another university; (2) that PRINCO could manage the endowment funds; (3) that capital gains plus interest from the fund could be spent by Princeton; (4) “the Robertson family trustees were “attempting to hold the foundation and the Woodrow Wilson School hostage” and that the Robertson family was engaging in a “gratuitous, baseless public relations campaign” which would harm both “the potential pool of student applicants [and] the receptiveness of funding agencies to Woodrow Wilson School grant applications.” (Wooster, 2006, 5) Analyses of Arguments The underlying issues all point to Princeton University’s non adherence to donor’s intent. Even the lawyer of Princeton University, Douglas Eakeley, “admitted that foundation money was used for departments outside the Wilson School”. Further, when Hechinger and Golden also reported that the foundation spent $750,000 for student tuition in courses that weren’t part of the Wilson School curriculum, “Princeton failed to disclose the diversion and admitted to the Journal that its action was “inappropriate.”” (Wooster, 2006, 6) These instances could tantamount to admission of guilt and a violation of the ethical standards of fundraising. Further, Princeton University’s record of using donor’s funds for purposes beyond those stipulated also diminishes its credibility. In a book written by Kelly (1998, 308) on Effective Fund Raising Management, she presented a Donor Bill of Rights which stipulates that all donors have the following rights, “to have access to the organization’s most recent financial statements; and to be assured their gifts will be used for the purposes for which they were given”. On these two major counts, the Princeton University allegedly violated. The source of the dilemma was primarily due to the flawed agreement between Robertson Foundation and Princeton University on the following aspects: (1) giving full control on the endowments funds to Princeton by agreeing to make majority votes to 4 Princeton members versus only 3 from the Robertson family; (2) by not providing clear and specific statements of the intent of the funds causing disputes on “public service versus government service”; (3) a silent dispute that existed for more than thirty years before it was legally addressed; (4) lack of monitoring and application of appropriate action in cases of violation; and (5) non adherence to a clear and agreed code of ethics. The Future of Fundraising Endowments The Robertson Foundation case clearly presents scenarios undermining possible implications of recipients’ misuse of donor’s funds. Ethical aspects of fundraising should emphasize a previously forged comprehensive code of ethics with four specifically defined guidelines: (1) “a credo, which is an ‘overarching statement of organizational philosophy and values’ (p.70); (2) general guidelines for decision making; (3) specific rules that prohibit certain actions and require others; and (4) definitions, rationales and illustrations.” (McElreath, 1997 in Kelly, 1998, 273). Without this and with the flaws enumerated in the Robertson Foundation case, fundraising endowments would face severe criticism and stricter scrutiny from the public and from the beneficiaries of the funds. As indicated, should Princeton University win this case, despite abundant evidence of defying donor intent, “it will be a grave blow to the cause”. (Wooster, 2006, 9) However, the case provided an enlightening revelation in the weaknesses of the system or agreement forged between the donor and the recipient. With more controls instituted and required by local and state governing bodies, the future of fundraising could still be saved. Conclusion An understanding of the concepts of fundraising and philanthropy should encompass ethical aspects for any undertaking to be successful. The importance of integrity, honesty and adherence to the purpose by which endowment funds are given must take priority in the accomplishment of the organization’s goals. References Kelly, K.S. (1998). Effective Fund Raising Management. London: Routledge. Norton, M. (2003). The Worldwide Fundraiser’s Handbook. London, England: Resource Alliance. Wooster, M.M. (2006). The Robertson Foundation Case: Can Princeton Ignore A Donor’s Intent? Retrieved 19 September 2009 from < http://capitalresearch.org/pubs/pdf/FW0506.pdf> Read More