$250 Million Gift to a Nonprofit is Withdrawn … Sort of

The news headlines were stunning:

Centre College Loses $250-Million Gift — Chronicle of Higher Education 

Centre College Loses $250 Million Gift After “Market Event” — Bloomberg 

Kentucky College Loses $250 Million Gift from Charitable Trust — Reuters 

There’s only one problem with the headlines: There never was a $250 million “gift” to Centre College!

Here are four lessons you can learn from this amazing public relations fiasco:

1. Do NOT mislead the public.

Perhaps the news media can be forgiven for getting the story wrong. After all, Centre College proudly announced on July 30, 2013: “Centre College receives historic gift to establish Brockman Scholars Program.” The official announcement began:

Centre College has received a gift of $250 million in the form of stock in Universal Computer Systems Holding, Inc. (Reynolds and Reynolds) from the A. Eugene Brockman Charitable Trust to establish the Brockman Scholars Program in Leadership and Entrepreneurship.”

Unfortunately, as recent events have demonstrated, the announcement was not just premature it was not true. The fact is that Centre College did not receive a $250 million gift. Peter Lattman, writing for Deal Book/ New York Times, quoted Centre College President John Roush as saying:

In retrospect, we might have put a big asterisk on this thing, but no one had any inkling that this would come about.”

The historic gift was a contingent pledge based on a complex recapitalization deal Centre College - Old Centregoing through. Regrettably, the financial deal blew up and, therefore, the gift never materialized, according to the College.

If the College had simply delayed announcing the gift until it actually materialized, it could have avoided enormous embarrassment. Alternatively, if the College had simply characterized the $250 million as a “pledge” or “potential gift” rather than a “gift,” it still could have avoided significant embarrassment.

2. Recognize the difference between a “pledge” and a “gift.”

Centre College had a contingent pledge for a $250 million gift. They never had the gift. It’s not a gift until you have the cash, stock, property, or irrevocable gift agreement in-hand.

Because the College never had a $250 million gift, it did not lose $250 million. That’s about the best that can be said of this situation. This is really just a case of a nonprofit organization publicly counting its chickens before they hatched. Don’t make the same mistake.

3. When you mess up, get your story straight, and make sure it’s complete and accurate.

The Centre College public relations mess has worsened as the almost-donor contradicted the College regarding the reason the gift did not materialize. Ry Rivard, writing for Inside Higher Ed, has done an excellent job reporting on the non-gift. Rivard shared this statement from Evatt Tamine, the head of the Brockman Charitable Trust, the would-be donor: 

As Centre knows… it was the scholarship side of this that derailed everything else.”

While Centre College officials maintain that the deal blew up when the company funding the trust was unable to recapitalize, the head of the trust says the deal fell through because of a failure of the trust and the College to agree to the terms of the scholarship program.

So, who is telling the truth? At this point, we don’t really know. However, what is perfectly clear is that this public disagreement about what went wrong makes an already terrible situation even worse.

When you stumble, it’s important to get the full story out to the public quickly and accurately. Centre College might have been quick, but it appears they might not have been completely forthcoming. This hurts its credibility.

4. When in the midst of a public relations fiasco, stop saying stupid stuff.

In the report, Rivard also shared a statement from Richard Trollinger, Vice President for College Relations at Centre College, who had worked on trying to secure the $250 million gift:

While this didn’t work out this time, I’ll be coming back to bend his ear and twist his arm, because it’s a compelling good we’re working toward.”

In case you’re unsure, the “he” referenced by Trollinger is Evatt Tamine, the head of the Brockman Charitable Trust. Trollinger wants to “bend his ear” and “twist his arm.” How lovely. Is this really what professional development has come to? Arm twisting?

Trollinger did not close an irrevocable $250 million gift. He did not prevent the College from making a premature, inaccurate announcement. Not only did he fail to get all parties to the negotiation on the same page regarding what went wrong, he did not even get out front on that particular issue. Now, he wants to twist the arm of the potentially alienated donor at the heart of the situation because Trollinger wants the trust to give again  and give more.

Trollinger’s utterance is the antithesis of being donor centered. It’s the wrong orientation and the wrong tone.

With the College in damage-control mode, I’m sure Trollinger would like nothing more than to close a mega-gift to help everyone forget everything that has gone wrong over the past several weeks. But, threatening to twist arms is not exactly the best way to achieve his goal.

I suspect that Trollinger understands the right way to do development work. I’m willing to give him the benefit of the doubt. I’m guessing that he now prefers that he had expressed himself more elegantly. And that’s my point.

A former British politician, Denis Healey, is credited with saying:

If you find yourself in a hole, stop digging.”

That’s good advice for Trollinger. It’s good advice for us all.

The Centre College situation is certainly embarrassing. Sadly, it’s a problem largely of its own making. So, while I feel a bit sorry for the College staff, the folks I’m most unhappy for are the 40 students who won’t be receiving a full scholarship to attend the school each year. I wish Centre College the best as it continues to work to provide meaningful scholarship assistance to worthy students.

That’s what Michael Rosen says… What do you say?

Advertisements

11 Responses to “$250 Million Gift to a Nonprofit is Withdrawn … Sort of”

  1. Let me start with saying that I was given Denis Healey’s advice as a child though I was never aware of the source until this article. I have even passed it along a few times. That being said, I find it disturbing to hear soliciting referred to as “arm twisting.” I see this as more than a lack of elegance. I see this as a disturbing insight. When does helping a potential donor realize the intrinsic satisfaction of making an impactful gift involve the manipulation implied by the term arm twisting?

    It is always been my belief that both parties, the donor and the recipient, should feel satisfied upon closing a gift (especially one of this magnitude). The idea of ear bending and arm twisting suggests that the donor’s satisfaction isn’t being factored into this instance. That someone whose objective should be to ensure this satisfaction would think in these terms, never mind say them publicly, is very disturbing.

    • Alan, thank you for commenting. I completely agree with you. As a proponent of donor-centered fundraising, I found Richard Trollinger’s use of the phrases “bend his ear” and “twist his arm” to be disturbing. My hope is that his remark does not represent his true feelings. If it does, Centre College has a serious problem.

      By the way, I’m glad to know you appreciated the Denis Healey quote.

  2. Michael, you hit the nail on the head when you stated the gift is not a gift until it is in your hand. It is unfortunate for the college administrators that they made an announcement prematurely because now they look foolish in the eyes of the public. I also agree that terms like “arm twisting” and “ear bending” are inappropriate to describe the cultivation process. I would also like to add that I recently saw the Healey quote credited to the late Will Rogers, but whoever said it, it certainly applies.

    • Richard, thank you for your comment. You’re right, Will Rogers is also credited with the hole-quote. During my childhood years, I thought it was my father who had coined the line. Well, regardless of the source, I’m glad you agree it’s great advice.

  3. Michael — Another excellent column–thanks. I, too, was taken aback by item 4, which Alan comments on, above. I hear our development officers talking this way internally quite a bit. It is off-putting, but I agree with you that it doesn’t represent their deepest feelings. I think it may be their way of dealing with the inevitable disappointments of the many “no’s” you get when you’re in the asking-for-money business, even if you’re inspiring and passionate. I think it was Trollinger’s way of saying that he wants to take another kick at the can. Unfortunately, he made the serious mistake of forgetting he was talking to a reporter, not to his buddies!

    • Jean, thanks for sharing your thoughts and insights. I agree that the type of language one might use in the office with colleagues will often be different than what one uses when speaking with prospective donors. However, we need to be careful. The words we use help shape our thinking. In other words, we may believe that development should not include arm twisting. But, if we glibly talk about arm twisting enough, we begin to think that it is an acceptable part of the fundraising process. Word choices have consequences.

      You’re right about Trollinger not keeping his guard up when talking with a reporter. That’s another lesson we can all learn from this story. Many years ago, a Wall Street Journal reporter spent an hour interviewing me. I was particularly cautious because I know that I’m frequently glib and snarky if I’m not careful. If I do say so myself, I did a pretty good job. But, I didn’t do a perfect job. I let one glib remark slip out. Of the entire one hour interview, can you guess which comment the reporter chose to quote? Yup, my glib statement. Lesson learned.

  4. Michael, Sometimes your glib remarks keep me in stitches. I can’t help myself. When I read some of your writings about “dumb and dumber”, interspersed with some of your glib remarks, I have to laugh out loud.

    So, since it’s already been published in the WSJ, what was the quote?

    • Lorri, thank you for commenting. I’m pleased to know that you appreciate my sense of humor. Not everyone does. Oh well. As for my WSJ experience, it was many years ago; I’ve actually forgotten what I said. I have the clip buried in my archives somewhere. If it ever resurfaces, I’ll be sure to share it.

  5. Michael, a very interesting post. I have seen this happen too many times, when the fundraiser believes the gift is a done deal, only to have to eat crow later. It is hugely embarrassing to the organization, it annoys and loses a previously prospective donor, and it results in loss of trust. People should remember that other old saying – wait until the ink dries! Thanks for sharing this.

Trackbacks

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: