Officials at Vanderbilt University got schooled. They learned, the hard way, that nonprofit organizations cannot unilaterally void the terms of a gift agreement without returning the donation.
This is a story that keeps on giving. It provides an important lesson for all nonprofit organizations about the requirement, ethical and legal, to honor donor intent.
The tale begins in 1933 when the Tennessee Chapter of the Daughters of the Confederacy donated $50,000 to the George Peabody College of Teachers to build a dormitory named “Confederate Memorial Hall.”
In 1979, Peabody was merged into Vanderbilt becoming the “Peabody College of Education and Human Development at Vanderbilt University.”
After years of discussion, according to Inside Higher Ed, Vanderbilt decided in 2002 to drop the word “Confederate” and rename the building simply “Memorial Hall.” The University took this action without gaining the approval of the Daughters of the Confederacy or returning the gift.
After taking Vanderbilt to court, the Daughters of the Confederacy received a Tennessee Appeals Court ruling in 2005 that ordered the University to either keep the original name of the building or refund the donation … in inflation-adjusted dollars. That $50,000 gift from 1933 is now valued at $1.2 million.
As reported in Inside Higher Ed:
The appeals court unanimously rejected Vanderbilt’s argument that academic freedom gave it the right to change the name. Vanderbilt argued that the Supreme Court has given private colleges considerable latitude in their decisions. But the appeals court said that was irrelevant because the agreement to name the dormitory ‘Confederate Memorial Hall’ was between a donor and a charitable group — and the government never forced the gift to be accepted.”
In its ruling, the Appeals Court stated (emphasis is mine):
We fail to see how the adoption of a rule allowing universities to avoid their contractual and other voluntarily assumed legal obligations whenever, in the university’s opinion, those obligations have begun to impede their academic mission would advance principles of academic freedom. To the contrary, allowing Vanderbilt and other academic institutions to jettison their contractual and other legal obligations so casually would seriously impair their ability to raise money in the future by entering into gift agreements such as the ones at issue here.”
It took quite some time but, with money raised from anonymous donors, Vanderbilt paid $1.2 million to the Daughters of the Confederacy and renamed the building this month in accordance with the Court’s judgment.
Unfortunately, this has not brought this story to a happy conclusion. Vanderbilt has damaged its reputation by revealing its willingness to “casually” disregard donor intent.
I stand firmly with the Appeals Court decision. How I feel, or anyone feels, about the old Confederacy or the word “Confederate” on the building is irrelevant in this case. Instead, there are two powerful governing issues involved here: