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Generally, when the topic of “donor intent” comes up in philanthropy circles it’s because of a complaint that a donor’s wishes are being ignored or subverted. That’s the back story behind the Robertson family’s suit against Princeton University, and its what conservative pundits are talking about when they say that the present incarnations of Ford, Rockefeller, and Pew have strayed from their founders’ ideals. On the surface it may seem that honoring donor intent in all cases is the right and obvious thing to do. But the recent revelation that before her death Leona Helmsley charged her multi-billion dollar charitable trust to attend to “the care and welfare of dogs” starkly illustrates that donor intent is a thornier question than it seems.

Stephanie Strom of the New York Times describes the extreme, but not unusual, dilemma faced by Helmsley’s trustees. While many donors have given to animal-related charities, Ms. Helmsley’s trust will have an endowment of $5 billion to $8 billion. Ms. Strom notes that at the low end that’s still 10 times more than the combined 2005 assets of all registered animal-related charities in the US. The trustees are not just concerned with how to manage a gift that dwarfs existing resources in the cause. According to the article, they are more concerned that such a lavish gift dedicated to dogs instead of people may incite public outcry. As Ray Madoff, a professor at the Boston College Law School, notes in an editorial titled “Dog Eat Your Taxes?“ this is not just an issue of Ms. Helmsley’s right of self-determination. The gift to establish the trust is tax exempt, which means society forgoes several billion dollars in tax revenues allowing Ms. Helmsley to fund the trust. To put the numbers into useful context, Mr. Madoff calculates that the taxes due may have equaled half of the annual budget of Head Start.

The trustees could legally decide to expand the trust’s mission, or they could follow an earlier mission that includes “indigent people” as well as dogs. Their dilemma is how, and whether, to honor Ms. Helmsley’s wishes. For the rest of us, the concern is whether a public policy that allows donors nearly unchecked ability to designate a philanthropic cause serves the public good.

The central question here, as with all regulation of the philanthropic industry, is how to define “public good.“ A good definition is hard to come by, a fact illustrated by the obituaries for Sir John Templeton, who died on July 8th. Sir John was the benefactor of the John Templeton Foundation, whose mission includes seeking ways to reconcile religious and scientific world views in the hope that each can gain insight from the other. Given the rancorous and unproductive rift between religion and science for centuries, it would be hard to argue that such a mission doesn’t serve the public good. Yet most of the obituaries noted that there are many outspoken critics of the foundation who claim that it seeks to undermine science and push a religious agenda in disguise. An alumni vs. alma mater battle at Harvard University surrounds the same issue: an increasing number of alumni are seeking to divert alumni giving away from Harvard’s already enormous endowment and toward higher education institutions in sub-Saharan Africa with the argument that gifts to Harvard no longer serve a public good.

When confronted with questions that are difficult to answer—for example how to define First Amendment protected speech—the general public and the courts have generally taken an expansive view. The dangers of drawing lines too narrowly, most believe, exceeds the harm of the few aberrations. Ms. Strom told me that after her piece was published reader response was essentially split between those who were outraged that so much money was being devoted to dogs, and those who staunchly supported Ms. Helmsley’s right to do what she pleased with her wealth. It’s also interesting to note that despite the now large number of blogs devoted to philanthropy, there was practically no discussion of the issues surrounding the Helmsley trust.

Some may consider the Helmsley gift an aberration, and unworthy of deep discussion. Given that the amount of wealth held in the upper tiers of society continues to grow, and the forecasted wealth transfers as the pre-boomer generation passes away, aberrations like Ms. Helmsley’s will likely become more common. Now is the time to begin a conversation on whether our public policy on this issue is appropriate. For instance, legal and economic scholar Richard Posner discusses the issues, possible changes to policy and the impacts that they might have.

On the other hand, delaying a substantive, reasoned debate on donor intent and the definition of the public good is a mistake. As large fortunes are increasingly be bequeathed to problematic—or even esoteric, rarefied or bizarre causes—the backlash may produce legislation that veers too far and constricts donor intent in ways that breed unintended negative consequences. Starting the debate now may allow us to successfully handle the issue while avoiding the worst of the thorns.

Comments

Hi. I am in fact preparing to write a piece on my own blog about this case. I’m a major gifts fundraiser for a non-profit and a shelter volunteer.

Irritated people threatened the family after Helmsley’s dog was awarded $12M, but people do these sorts of things all the time.  I’m sure if we asked famous columnists to share samples of the responses to their writings, we would be surprised.  But I am wondering why any legislation would be crafted as a result of this case? A private citizen used legal trust structuring of her estate to fund the improvement of the welfare of dogs. 

When Henry Berg founded ASPCA in the late 1800’s, he left $100,000 to the welfare of animals. His family sued on the basis that he must have been insane. A judge ruled in Berg’s favor and ASPCA was founded.  Today the group does a lot of good work, though at the time I’m sure people had no idea of what would be possible in the way of animal welfare. BTW -  I don’t work for them but am a monthly supporter.

The donor intent was not specific enough. Helmsley left a clause allowing her trustees to determine where to donate the money. Legally that was the only thing written on the paper that mattered. Helmsley herself left the loophole. Animal rights people can be upset, but she is to blame. 

I’m not clear on why you think it is a problem for a gift to dwarf the budgets of all the major animal rights groups?  The Trustees - if her will were specific in naming the groups and amounts she wanted left to which organizations - would have then been tasked with administering the gift, very likely over a long period of time.  They could have been creative, encouraging the benefactors of their dispursements to collaborate with localized groups, thus stretching the impact of her gift.  But I don’t understand why you seem to be suggesting that gifts to animal groups need follow a threshold limit of some sort, as if such a large gift would transform the landscape of animals rights, when infact that is what transformative gifts do.

Thanks.

August 30, 2009

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