Little legal oversight for prizes cap

When it comes to interpreting the terms of gifts donors have made over the past three centuries to establish student prizes, Yale may have the last word.

To cap student prizes at their target of $1,000, administrators must comb through hundreds of gift agreements and find legal language that allows the University to cut down on prize money and use the savings to shore up funding for financial aid and other expenses. But despite the objections of professors and students who argue Yale may be violating the spirit, if not the letter, of donors’ intentions, a lack of oversight leaves the University largely free to interpret those intentions as it sees fit, experts said — but within bounds: As long as the University’s reinterpretations are not a complete violation of the terms of a donation, redistribution is not likely to gain the notice of those who might oppose it.

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Administrators contend that the language of many gift agreements gives Yale some latitude, and some donation documents examined by the News do appear to leave room for interpretation. Other donors, though, appear to have narrowly restricted how the University may use their money, often going so far as to specify the now long-dead professors who must serve on prize selection committees or the make of the medals to be awarded to debate tournament winners.

“There’s such broad variety in the prizes,” Vice President and Secretary Linda Lorimer said. “This [policy] is only affecting prizes where there is discretion given.”

Lorimer said no gift will be touched unless Yale’s general counsel determines that a donor gave the University discretion to take income from the funds in excess of $1,000 and use it for financial aid. Such decisions will only be made after administrators carefully examine the language, context and other information relevant to a gift, Vice President and General Counsel Dorothy Robinson said in February.

But ultimately, it is up to Yale to decide which prizes give discretion. Though the University has a legal responsibility to carry out its donors’ intentions, legal experts said, only the attorney general of Connecticut, Richard Blumenthal LAW ’73 can force Yale to interpret the donations more strictly according to state law, said Eric Rakowski, a professor at the University of California at Berkeley School of Law who teaches trust and estate law. And Blumenthal’s office, which is responsible for the oversight of all charitable giving in the state, rarely pays close attention, he said.

Blumenthal’s spokesman declined to comment for this story.

Since many of Yale’s prizes were established more than a century ago or before by long-dead donors whose heirs have scattered, few donors will be watching, added Lawrence Friedman, a professor of trust and estate law at Stanford Law School.

“The theoretical answer is the attorney general of Connecticut has standing to complain and to enforce the original terms,” Friedman said. “But as a practical matter, who’ll know and who’ll care?”

Even if Yale never faces legal action for its reinterpretation of prize funds, if Blumenthal or one of his successors ever brings the University to court, the University may invoke the legal doctrine of “cy-près,” claiming that it is impossible or illegal to carry out the original terms of the gift, Friedman said.

Other universities have successfully used the doctrine in the past to repurpose the gifts of donors who stipulated that their money aid a certain type of student — white, Protestant, male students, for example, he explained. Yale administrators’ argument that prize money has reached impractical, unreasonably generous levels, he said, could also be used in the courts, which vary in the leeway they will allow in donation cases.

Administrators have already found many prizes that allow Yale some freedom of interpretation, Deputy Provost Charles Long said.

The English department’s Charles Wyllys Betts Prize in Composition, for example, is currently awarded to a sophomore for an English essay. When Betts’s nephew donated $1,000 to Yale in 1890, he stipulated the type of essay that would merit the prize but added that with the University president’s approval, the “terms and object” of the award could be altered.

Some donors also give the University leeway to reinterpret other aspects of their prize donations. Though Charles Bristed, class of 1839, specified that one of the judges for the Greek translation prize he endowed had to hold a master’s degree from either Yale or Columbia, he also gave the other judges the power to fill judging vacancies as they saw fit.

David C. DeForest of New Haven, the donor who endowed the DeForest Prize for the senior “who shall write and pronounce an English Oration in the best manner,” was even more specific: In his will, which also gave money to Yale for establishing a scholarship intended for his descendants, DeForest stipulated that in years when no descendant was at Yale, the holder of the DeForest scholarship would have to change his last name to DeForest. Though DeForest’s heirs later released Yale from the provision, the University was not to use the income on the gift endowment for anything but a prize in English oratory.

Similarly, the terms of the Gordon Brown Memorial Prize, which is awarded annually to the junior who exhibits high scholarship and leadership, allow Yale to tweak the judging process for the prize but specifically prohibit the University from changing the purpose of the fund.

Even if Yale sees no legal action for its reinterpretations, Rae Goldsmith, a vice president at the Council for the Advancement and Support of Education, a non-profit devoted to educational donations, said Yale needs to be wary of alienating donors.

Rakowski said Yale risks generating the negative publicity that surrounded Princeton University after heirs of Charles and Marie Robertson — who donated $35 million to Princeton university’s Woodrow Wilson School of Public and International Affairs in 1961 — sued Princeton over what they claimed was its failure to fulfill the terms of the donation, which they said was not meant to be invested in the rest of Princeton’s endowment. (The lawsuit was later settled out of court.)

“If you’re a university, you certainly don’t want the sort of publicity Princeton got because then donors may be reluctant to give to you,” Rakowski said. “But it all depends on the exact language and the optics of it. If Yale tries to make the case that the money’s all going to students anyway, people may not care.”

Indeed, administrators have argued that the intention of prizes is to support the general excellence of Yale students, which allows the University to redistribute the money for financial aid for prizewinners, without altering this aim.

Unlike the Robertson defendants, though, the heirs of Yale’s prize donors may not know or care what Yale does with the gifts, Friedman said.

“The longer the time goes, the less anybody gives a damn,” he said. “Legally, it’s relevant, but practically, they don’t run much risk, especially if they don’t do anything egregious.”

Nora Caplan-Bricker contributed reporting.

Correction: April 1, 2010

An earlier version of this article misrepresented the source of the $35 million donation to Princeton university’s Woodrow Wilson School of Public and International Affairs in 1961. The gift was made by Charles and Marie Robertson, not their heirs, who later sued the university.

Comments

  • Accountability Please

    I call for an accounting of the 1958 $70,000 bequest of Hope Conklin Macintosh to Yale University for a scholarship (The Douglas Clyde Macintosh Scholarship in Systematic Theology) in memory of her husband, the late Dwight Professor of Theology, D.C. Macintosh.

    Where is the money?

    How much interest has it accrued?

    How has that interest been used to fulfill the donor’s directives and wishes?

    If it has not been so used, for what has it been used instead?

    Is it “lost” and irretrievably mized with Yale’s general fund?

    Is this the fate of all present future donors’s funds at Yale?

    If not, is the Macintosh bequest treated in a cavalier manner because Dr. and Mrs.Macintosh died without heirs to fight for their interests?

    Paul Keane
    M.Div. ’80
    The Ant-Yale

  • ThinkingMan

    Holy batman, $1000 from 1891 compounded at the very low 5% interest rate is $350000 (Swensen gets 30%+). That should definitely go to scholarships rather than a prize

  • Faculty

    in other words, they will do whatever they can get away with. Wonderful example.

  • Another Faculty

    Yale is rightly proud of its prizewinners, when the money comes from outside of Yale:

    http://www.yaledailynews.com/news/university-news/2010/03/24/yalie-top-five-math-contest/

    When the money comes from a donor to Yale, that’s another story…

  • Rudy ’73

    @#2 Thinking Man:
    I’m a little fuzzy on the math. Some of the annual return is used to pay out the prize isn’t it? How much each year is used and how much is retained for growth?

  • Bim

    Yale should not be surprised if alums are much more cautious about giving in the next few years. No one knows better than students about how some grant funding is mishandled. And now they want to change terms of agreements.

    Lowering the prize amounts awards mediocrity and weakens the intent behind the prize.

    Also, it’s very upsetting that Yale does not have a central location notifying students about the prizes and other opportunities. They need not list list the prize amounts, but the fact that some of these prizes are available.

    But no, this is typical Yale. They dole out the information to a limited few. Those with the inside knowledge make out.

    These are very distressing reports, and the Yale Daily News is to be commended on its is reporting.

    thank you…