Media war intensifies over lawsuit

The battle between the University and the Robertson family is gathering increasing national attention as it continues to play out in the media. Both sides await decisions from a judge that could settle some aspects of the case filed in 2002 over control of an $840 million endowment that currently funds parts of the Wilson School's graduate program.

Mercer County Superior Court Judge Neil Shuster heard oral arguments on several motions in November and has yet to rule on any of the pending motions. In the meantime, representatives from both sides are exchanging increasingly harsh criticism of one another in newspapers and magazines across the country, as the largest "donor intent" lawsuit in U.S. history enters its sixth year.

With anticipation of Shuster's rulings leading to heightened media attention, other higher education institutions are paying close attention to the case and its implications for their own donors. The nonprofit Center for Excellence in Higher Education, which seeks to help donors become more involved with their gifts, had its public launch last week.

The Indianapolis-based center will help benefactors negotiate conditions related to their donations and hold institutions more accountable for how they use major gifts.

"It won't happen from within," said Executive Director Frederic Fransen at a press conference launching the center on Tuesday. "Those who support higher education with their voluntary contributions are uniquely qualified to bring about these needed changes," referring to the center's goal of having donors' requests honored by recipient universities.

Bill Robertson '72, the chief plaintiff in the case, wrote a column for Forbes magazine, published Sept. 17, declaring an "epidemic of broken promises" among nonprofit organizations across the country, saying that such groups ignore promises they make to donors, and warning of potential future consequences.

Robertson cited the June 2007 issue of CPA Journal, which reported that "more than 20 separate states' attorneys general have launched 30 investigations into nonprofits all over the United States."

"Americans of good conscience need to take a stand," Robertson said. "If top officials of universities and other tax-exempt organizations can solicit tax-deductible contributions for one purpose and use the money for other purposes, donors will stop giving. If that happens, trust in the nonprofit sector will be gone — and many Americans will be hurt."

While Robertson's suit is specifically against his alma mater, he alleges that Princeton is not the only nonprofit that misuses donated funds. "Unfortunately, a mounting body of evidence indicates that Princeton is not alone," he said. "Many nonprofits apparently walk away from promises they make to donors."

Robertson's accusations were countered three days later in a Forbes.com commentary by University Vice President and Secretary Bob Durkee '69.

"Contrary to what [Robertson] claims, his lawsuit seeks not to honor donor intent, but to violate it," Durkee said. "It seeks not to protect arrangements put in place by his parents 46 years ago, but to overturn them."

Durkee also said Robertson is attempting to abolish the governance mechanism that his parents established to administer the gift. He argues that Robertson is attempting to take control of the funds donated by his mother, Marie Robertson, to Princeton in 1961, for the purpose of maintaining and expanding the Wilson School's graduate program.

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"For 46 years, that is exactly how the funds have been used, helping to support a school that does an excellent job of preparing students for careers in government service and related fields," Durkee wrote.

The family's case, he added, has not always been about an alleged misuse of funds, and that their arguments have shifted since the case was originally filed.

"Prior to the filing of the lawsuit, William Robertson and other family members concurred in the decisions of the Robertson Foundation board and praised the work of the Woodrow Wilson School," Durkee said. "When he filed the lawsuit, it was over differences about investment strategy, not spending. Over the last three-and-a-half years, the investment strategy that the board approved over his objections has increased the value of the foundation's endowment by more than $300 million."

In 2006, the University and the Robertson family each filed several motions for partial summary judgment, which is when a court makes decisions about particular facets of a case without a full trial. Such judgments are only issued when the court finds that there are no relevant facts in dispute.

The University has asked the judge to grant four summary judgment motions.

First, that Princeton is the sole beneficiary of the Robertson Foundation and can name the majority of the Foundation's trustees; second, that the University may use the capital gains of the Foundation, along with its dividends and interest payments; third, that it is permissible to have the Foundation's funds invested with the Princeton University Investment Company, which also manages Princeton's endowment; and fourth, that some of the Robertsons' claims are too stale to be heard by the court because they fall beyond the applicable limitations period.

Meanwhile, the Robertson family has asked the judge to grant two summary judgment motions. First, that Princeton cannot claim that the money it overdrew is offset by amounts that the University allegedly did not charge the foundation; and second, that all the defendants, including the University, have a fiduciary duty to the Robertson Foundation to use its assets only to advance its mission.

The University has also asked the judge to rule that the plaintiffs are not entitled to a jury trial because of the nature of their claims.

The suit has cost the University more than $22 million in legal fees and involves more than 400,000 pages of documentation. A trial date has not been set, but such a day would most likely come more than a year after Shuster announces his rulings on the seven motions pending before him. After originally telling the parties a ruling would likely take three months, Shuster has taken nearly a year to consider his decision.