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The good news about endowment fund lawsuits is that they occur rarely. That, explains Donald Kramer, a law partner at Philadelphia’s Montgomery, McCracken, Walker & Rhoads, is because most donors—once they’ve irrev- ocably let go of their gift—lack standing to sue.
However, there is some bad news. When endowment fund cases
go to court, they can cost both sides dearly. One example is Robertson v. Princeton University, a lawsuit commenced in 2002 in a New Jersey court and settled some six years later. Charles and Marie Robertson contributed $35 million in A&P supermarket stock to the Ivy League university in 1961 to support the Woodrow Wilson School of Public and International affairs. The Wilson school was “where men and women dedicated to public
service may prepare themselves for careers in government service, with particular emphasis on the education of such persons for careers in those areas of the federal government that are concerned with inter- national relations and affairs.” By the beginning of the 21st century, the fund’s assets had grown
to $900 million. Meanwhile, Charles and Marie’s heirs believed that Princeton was not using the fund’s income appropriately. On July 2, 2002 they sued, asking the court to redirect the fund to other universities,
which they believed would better fulfill their ancestors’ intent. According to a report published by the Planned Giving Design
Center on November 12, 2009, “The lawsuit involved numerous dep- ositions and other discovery, costing Princeton over $40 million in expenses through December 2008 when the suit was settled.” Eleven months earlier a December 10, 2008, Bloomberg story stated,
“The school will pay $50 million… to allow the family to create a new foundation to prepare students for government service, and $40 million to cover the family’s legal fees.”
Six years of legal fees may have eaten 400 years of donations That’s eighty million dollars in plaintiff and defendant legal fees over six and a half years! Montgomery, McCracken’s Don Kramer—himself
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