- The Washington Times - Thursday, September 13, 2007

ANALYSIS/OPINION:

A Virginia Supreme Court panel recently heard oral arguments in a case that will help decide the future of Virginia’s historic Randolph-Macon Woman’s College.

At issue is whether the college’s students and donors have the legal right to question the school’s trustees, who voted to make the college coeducational last year. Can the trustees decide on their own to “repurpose” the school’s accumulated assets, originally donated to support educating women in the liberal arts? Can they transfer those assets to a coeducational institution, “Randolph College,” which has an entirely different mission? The Supreme Court panel was asked to recognize that a century-old decision of the court allows the students and donors to challenge this hijacking of the school’s assets by the trustees.

You’re probably not an alumna of Randolph-Macon Woman’s College, didn’t donate to the $100 million capital campaign that ended just before the college announced it “needed” to go coed for financial reasons, and you haven’t contributed to the school’s $140 million endowment. So you probably think this lawsuit has nothing to do with you. You’re wrong.

This lawsuit is a fight for anyone who donates to a nonprofit organization in Virginia and it addresses a larger issue that matters to donors everywhere: “donor intent” and the recourse donors have if money given to charity for one purpose is used for another.

You may know about a growing number of donor intent lawsuits elsewhere. Princeton University, for instance, has been accused of diverting nearly $200 million from a charitable foundation intended to train students for government careers. Tulane University has allegedly used Hurricane Katrina as an excuse to eliminate its coordinate woman’s college, Newcomb College, and claim its endowment.

These lawsuits have been brought by the original donors’ descendents. In the Randolph-Macon Woman’s College case, there isn’t a single large donor, but thousands of donors.

What recourse do donors who give smaller amounts have when an institution changes its mission and uses assets accumulated under the original charitable mission for another purpose? What if the new purpose is the direct opposite of the original purpose, as in our case?

In some states, anyone with a “special interest” in a charitable trust, which typically includes beneficiaries and donors, has the right to go to court when the funds are diverted to a different purpose. In Virginia, however, as in some other states, a court has ruled only the attorney general has the right to hold the trust accountable. Under this ruling, unless the state attorney general steps in, there is little if anything you can do about it.

Traditionally, state attorneys general are responsible for overseeing charitable trusts. With approximately 1.4 million U.S. charities, however, this is a daunting task for just 50 state attorneys general offices. Besides, this duty is just one of many and, often due to lack of staff and funds, oversight of charities is generally passive and sporadic, with only the most egregious abuses investigated. This is why it is important for “ordinary people” — including donors — to be able to object to how charitable assets are used.

If we expect donors to continue supporting charities, the donors must be confident their money will be used as intended. A 2005 Zogby poll found that “97 percent of the respondents would definitely or probably stop giving to charities that accept donations for one thing, but use them for another.”

One way to encourage trust in nonprofits is to allow more than just the attorney general to sue when enforcing trust obligations. There are clearly some instances (such as our case, where the entire charitable mission of the institution was changed) where it is logical to grant donors and others with a clear interest in the dispute the right to take charities to court.

The Randolph-Macon Woman’s College case isn’t about coeducation. It’s about more than $250 million donated for one charitable purpose and now being used for a different purpose — and whether donors and beneficiaries of that trust can legally question the misuse of those assets.

We hope the Virginia Supreme Court and Attorney General Bob McDonnell understand the larger issues here and act to strengthen charitable giving in the Commonwealth, not erode public confidence in the system.

Anne Yastremski, a Randolph-Macon Woman’s College alumna, is executive director of Preserve Educational Choice, Inc. (www.preserveeducationalchoice.org), an organization working to save Randolph-Macon Woman’s College. Readers can contact her by e-mailing anne@preserveeducationalchoice.org.

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