Robertson Foundation lawsuit Q&a updated December 18, 2008
Don’t Mrs. Robertson’s children claim this case is about “donor intent?”
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12. Don’t Mrs. Robertson’s children claim this case is about “donor intent?”They make this claim, but the fact is that Mrs. Robertson’s clear intent was to donate the $35 million to Princeton—not to leave it in the control of her children. The only restriction imposed upon Mrs. Robertson's gift was that the Foundation’s assets be used in accordance with its Certificate of Incorporation. The creators of the Foundation, including Charles Robertson and University president Robert Goheen, put in place a governance mechanism that provides majority control of the Foundation board to trustees appointed by the University so that it can make the kinds of academic decisions and long-term commitments that are essential to sustain a world-class graduate program. [Document: Excerpt from President Goheen's May 1, 1961 Letter] The organizing documents were drafted by Charles Robertson’s friend and counselor, Eugene Goodwillie, and in 1970 Mr. Robertson personally told the Internal Revenue Service that the University’s “effective control of the Foundation” was “agreed to by the donors.” [Documents: Excerpt from Charles Robertson's August 20, 1970 Notification Concerning Foundation Status; Charles Robertson's August 7, 1970 Letter] [See: Question 19; Question 32] Through their litigation, Mrs. Robertson’s descendants are seeking to overturn this governance mechanism, and to substitute their judgment for that of the University as to how best to utilize Foundation funds to educate students, recruit and retain faculty, design curriculum, encourage research and promote an array of other activities that contribute to a robust and productive intellectual and pedagogical community. Unlike plaintiffs, Princeton believes the decisions that were made by the donor and written down more than 45 years ago should continue to be respected, including the decision to donate funds “exclusively for the benefit of Princeton” and the decision to create a governance structure for the Robertson Foundation that “is controlled by Princeton.” 13. What are plaintiffs seeking in this litigation?Plaintiffs have asked a New Jersey court to transform the Foundation from a supporting organization committed to the Woodrow Wilson School graduate program at Princeton University into a private foundation controlled by them, in effect severing the relationship between Princeton and the Robertson Foundation. This attempt by certain Robertson family members to gain control of the assets of the Foundation is fundamentally at odds with the unambiguous agreement that the donor and her husband made with Princeton. This agreement, as reflected in the Foundation’s Certificate of Incorporation, provided that the Foundation’s purpose was to “contribute, lend, pay over, or assign the income of the corporation and/or the property of the corporation…to or for the use of Princeton….” [Document: Excerpt from the Foundation Certificate of Incorporation] As General Goodpaster—who served on the Foundation board for 41 years, including 20 years alongside Charles Robertson—testified: “[Charles Robertson] was very devoted to Princeton. He was a Princetonian himself and had many stories to tell of his time at Princeton. He really loved the school. There was no doubt about it. And at no time ... was there any consideration of any other school.” Plaintiffs are also trying to get the court to reverse the Robertson Foundation’s decision to retain the Princeton University Investment Company (PRINCO) to manage its investment portfolio, despite the fact that the Certificate of Incorporation authorized that decision, and despite the fact that the decision has proved to be a resounding success for the Foundation. [See: Question 34; Question 37] Apparently as part of their strategy to recapture money previously given to Princeton so they can control an even larger pool of assets themselves, the Robertson family members also claimed that the Certificate of Incorporation limits spending by the Foundation to dividends and interest earned by its endowment and prohibits the Foundation from spending realized capital gains. They took this position notwithstanding the unambiguous language of the Certificate itself that permits such spending, the adoption of the Uniform Management of Institutional Funds Act (“UMIFA”) in Delaware and New Jersey that also unambiguously permits such spending, and the routine practice of other managers of charitable corporations to include realized capital gains in spending decisions. Plaintiffs ask that Princeton reimburse the Foundation for realized gains transferred to the University since 1992. As described below, the court rejected these arguments, granting Princeton’s motion for summary judgment on the issue. [See: Question 38; Question 39] Finally, the Robertson family members challenge Foundation funding for certain aspects of the Woodrow Wilson School graduate program, such as School research centers and summer salaries for graduate school faculty. Because these family members disagree with the School’s determination that such expenditures benefit the graduate program, they want the court to order Princeton to refund these expenditures to the Foundation. [See: Question 30] 14. Has the Robertson family always disapproved of the Woodrow Wilson School or the way Princeton has used Foundation assets?No. For most of the history of the Foundation, the family was very supportive of the Woodrow Wilson School and of the University’s use of the Foundation’s assets. The vast majority of decisions made by the Foundation in its 45 year history were made with the unanimous support of the board—including Charles and/or William Robertson, who, between them, attended all of the board meetings held in the past 45 years. (Between the time he was appointed to the Foundation board and the time he filed suit against Princeton, William Robertson attended 28 board meetings and more than 60 meetings of the Foundation’s Investment Committee.) In 1977, for example, Charles Robertson wrote that he “never had cause for regret” that his wife had provided support for the Woodrow Wilson School, which he described as “first rate” and “doing an outstanding job.” [Document: Charles Robertson's January 8, 1977 Letter] In January 1981, plaintiff William Robertson wrote that “The Woodrow Wilson School is the leading educational institution in the world in the field of public and international affairs as a result of (a) its fine faculty and student body and the administration by Princeton University and (b) the great financial capability it possesses as a result of the Robertson Foundation gift by Marie and Charles Robertson.” Ten years later, in 1991, plaintiff William Robertson wrote: “… I have to say, [the Robertson Foundation is] achieving the kinds of goals that Mom and Dad would have hoped for. The Woodrow Wilson School continues to be the foremost school in public and international affairs in the world.” Download 180.02 Kb. 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