Two recommendations for savvier higher education giving

As Martin Wooster and Iain Bernhoft have discussed in Philanthropy Daily, Hillsdale College and the University of Missouri (MU) are in the middle of a lawsuit over the use of a $5 million bequest from Sherlock Hibbs to the MU’s Trulaske College of Business.

Mr. Hibbs endowed six positions for professors who are “dedicated and articulate disciple[s] of the Ludwig von Mises (Austrian) School of Economics,” and included a unique fail safe: Hillsdale College would oversee the University of Missouri’s use of his gift.

Hillsdale is now suing the University of Missouri for failing to meet the terms of the endowment. A statement from Hillsdale asserted, “Rather than comply with Mr. Hibbs’s explicit wishes, the University of Missouri searched for a workaround.” Emails between College of Business Dean Bruce J. Walker and his colleagues in 2006 suggest that the University of Missouri sought a way around Mr. Hibbs’s mandate by simply recasting descriptions of existing faculty members. Five of the six positions were created via internal promotion, and an outside search was conducted only for one position.

As one would expect, the debacle has sparked a heated debate. Several commentatorshave questioned whether Mr. Hibbs’s gift restriction threatens academic freedom, while others argue that MU should have rejected the gift if it violated the University’s institutional mission.

Christian Basi, director of media relations for the University of Missouri, defends MU’s use of the gift by pointing out that the gift agreement only stipulated that professors must believe in Austrian economics, but it made no condition that they must teachcourses related to Austrian economics.

I doubt Mr. Hibbs would be pleased with this explanation, much less proud.

Rather than hash out the debate any further, I’d like to offer two suggestions as to how college donors can give with confidence.

APPROACH THE GIFT AGREEMENT AS A PROCESS.

Gift agreements give the donor an opportunity to clearly articulate his or her wishes and give the university an opportunity to define its institutional boundaries. Universities have the right to reject a gift if it violates academic freedom, just as donors have the right to withhold their gift if they lack confidence that it will be executed well.

The gift agreement should be part of an ongoing conversation and should give both sides ample time to work through issues. Donors should not be afraid to ask questions or bring in outside counsel. The process should give the donor insight into the university’s priorities, procedures, and approach to donor relations. And both parties should be willing to walk away if amenable terms can’t be reached.

Angelo Pizzagalli’s gift to the University of Vermont (UVM), which endowed a Chair of Free Enterprise, shows this idea in action. Mr. Pizzagalli worked with UVM, his alma mater, to define the terms of his $3 million gift to the business school. The executed gift agreement clearly articulated his intent and respected UVM’s academic freedom and institutional autonomy. This April, the University celebrated the investiture of Professor Andrey Ukhov as the inaugural Pizzagalli Chair of Free Enterprise, and this fall, Professor Ukhov will teach a course titled “Free Markets & Free Enterprise.”

THINK BEYOND YOUR ALMA MATER.

Congress has pitiful public approval ratings, yet Americans continue to re-elect incumbent senators and representatives. We see the same trend in higher education: Public trust in higher education hit an all-time low of 48% last year, yet alumni giving rose 6.9%, reaching $12.15 billion.

Rather than give on auto pilot to their alma maters, donors should evaluate their options and consider whether another institution better fits their goals. The Fund for Academic Renewal recently helped an anonymous donor establish a scholarship at Furman University, rather than the donor’s already well-endowed and prestigious alma mater. By supporting Furman’s Society of Tocqueville Fellows, this gift will advance civic education—an area often overlooked and underfunded, yet essential to a healthy democracy. The donor was keenly interested in American history, government, and politics, and “was happy to find a program that could cultivate students’ deep and thoughtful appreciation and understanding of these areas.”

Nostalgia is a powerful force, and it is natural and good for donors to wish to give back to the universities that profoundly shaped them. However, donors like Mr. Hibbs, with a commitment to a particular school of thought or field of study, would do well to think beyond their alma maters. Another university’s priorities may align more closely with their vision and better achieve their philanthropic objectives. This important strategy is one of the best ways for donors to realize their goals and protect their giving.