The news about country-music superstar Garth Brooks this week was not about his latest appearance on stage. Instead, the big story was about his appearance in a courtroom as jury selection began in his civil lawsuit against Integris Canadian Valley Regional Hospital, Yukon, OK. Brooks is seeking the return of his $500,000 contribution since the Hospital has neglected to name a building after his late mother, as he asserts was the agreement.
This news story raises operational and ethical issues for all nonprofit organizations that we can explore now. As time goes on, there will be additional lessons to be learned about both fundraising and public relations.
Despite many news reports on the subject, many of the details of the case are not clear including the timeline of events. As the trial proceeds, we’ll certainly get more information about what happened.
Here is what we know at this point:
- Brooks contributed $500,000 to the Integris Canadian Valley Regional Hospital, his hometown hospital, in 2005.
- Brooks filed his lawsuit in 2009. Brooks alleges breach of contract, revocation of gift/constructive trust, fraud in the inducement, and negligent misrepresentation/constructive fraud.
- Jury selection for the civil trial began this week.
- Beginning in late 2003 or early 2004, Brooks says that the Hospital courted his support and often discussed naming a building after his mother, even showing him mock-ups. Brooks asserts that the Hospital ultimately promised to name at least part of the facility after his mother.
- The Hospital asserts that the gift was unconditional.
- The Hospital has not named a building after Brooks’ mother.
- A Hospital official says the Brooks donation has not been spent and remains in a Hospital account.
Here are some questions I have:
- Is there a written gift agreement?
- Do any copies of the named-building mock-ups exist?
- If the gift was made in 2005, why hasn’t the Hospital put it to use?
- Why didn’t the Hospital return the gift since it’s just been sitting on it for six years?
While we will certainly learn more in the coming weeks, there are already some lessons we can learn from this story:
Gift Agreements. If Integris and Brooks had a well written gift agreement in place, it’s doubtful that the situation would have ended up in court. When a donor makes a substantial contribution, it’s a great idea to put together a gift agreement that details what is to be given by the donor and when. And, the agreement should also outline what the nonprofit is offering in return and when. In addition, the gift agreement should detail how the donation will be used, for what and when. A solid gift agreement will ensure that both sides understand the nature of the relationship. Getting everyone on the same page is essential. A gift agreement will make it more difficult for either party to deviate from the understanding and it will avoid confusion and disappointment.
Even if Integris and Brooks did not have a written gift agreement, they still might have had a verbal contract. If the existence of a verbal contract can be proven, it is just as binding as a written contract. Brooks’ claims are based either on a written gift agreement or a verbal agreement. A well written gift agreement could have avoided a lot of stress for both parties. In any event, Integris should have done everything possible to avoid a trip to court and the resulting horrible, probably costly, publicity.
Solid Notes. Whether or not a written gift agreement is executed, development staff should maintain a file with detailed notes about interactions with prospective donors. In the Integris situation, the development staff should have provided notes to the file about each interaction with Brooks, what was said by whom, what gift opportunities were discussed, what materials were used, and how the prospect reacted. Solid notes can help avoid a conflict with a donor by allowing staff to gently refresh a donor’s memory should it become necessary. And, if things end up in court, solid notes can provide a defense.
It will be interesting to see what kind of documentation Integris and Brooks produce during the course of the trial. In the absence of a gift agreement, copies of notes and correspondence will take on greater importance.
Correspondence. Good correspondence can also serve many of the same purposes as solid notes. Sending a prospect a follow-up letter after a meeting is a good idea for three reasons: 1) It’s good manners to thank the prospect for his time. 2) It gives the development professional a chance to summarize what was discussed thereby avoiding confusion. 3) It provides documentation about what has taken place at each point of contact.
As with file notes, correspondence between Intregris and Brooks will likely shed light on the nature of the gift agreement.
The jurors will ultimately decide whether Integris misled and/or defrauded Brooks. The jurors will decide the case on the evidence and the law. However, nonprofit organizations must adhere to an even higher standard. We rely on the public trust. Therefore, we must adhere to the highest ethical standards and not just hide behind the technicalities of the law.
The Association of Fundraising Professionals Code of Ethical Principles and Standards clearly addresses the core issue raised by the Brooks lawsuit:
Standard 12: Members shall take care to ensure that all solicitation and communication materials are accurate and correctly reflect their organization’s mission and use of solicited funds….
Standard 14: Members shall take care to ensure that contributions are used in accordance with donors’ intentions….
Standard 16: Members shall obtain explicit consent by donors before altering the conditions of financial transactions.”
Simply put, it is essential that nonprofit organizations understand a donor’s intentions and, then, honor those intentions once agreement is reached.
The situation with Integris also raises another related issue. If the Hospital needed to raise funds, why has it been sitting on the $500,000 rather than putting the money to good use? Brooks thought the money would go into bricks and mortar. Integris thought the gift was unconditional. Either way, why didn’t they use it? It’s been six years! Either way, they have not honored there version or Brooks’ version of donor intent.
I’m sure that Brooks would much rather support his hometown hospital and honor his mother rather than get his money back. For Integris to let the situation get to this point is shameful. Not only does it reflect poorly on Integris, it has the potential to negatively impact the entire nonprofit sector.
To avoid becoming the next Integris, nonprofit organizations should deal honestly and clearly with prospects. Detailed notes should be maintained and correspondence with the prospect should summarize important points from discussions. Once a gift commitment is agreed to, it should be put into writing. Honesty, clarity, attention to detail, reducing conversations to written documents, and understanding and honoring donor intent are what will keep donors happy.
For more information about this story, here are some helpful links:
- News story from 2009 about the filing of the lawsuit.
- News story from 2012 about the start of court proceedings.
- Garth Brooks’ legal petition to the court.
- My article, “Doing Well by Doing Right: A Fundraisers’ Guide to Ethical Decision-Making,” provides a model for sound ethical decision-making.
That’s what Michael Rosen says… What do you say?
UPDATE (January 25, 2012):
Garth Brooks has been awarded $1 million in his lawsuit against Integris Canadian Valley Regional Hospital. This includes the return of his $500,000 donation as well as $500,000 in punitive damages. The jury decided in favor of Brooks saying the “Hospital defrauded him by accepting a $500,000 donation and failing to honor his request to name a building for his late mother,” according to a report in The Chicago Tribune. It remains to be seen if Integris will appeal the decision and/or if Brooks will donate any or all of the amount awarded to him in the case.
UPDATE (January 25, 2012):
Go to Melinda’s comment below to read the official statement from the INTEGRIS Executive Director. My comments follow the message. I think you’ll find it as terrible as I did.