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In philanthropy, donor intent is the purpose, publicly expressed or not, for which a philanthropist intends a charitable gift or bequest. Donor intent is most often expressed in gift restrictions, terms, or agreements between a donor and donee, but it may also be expressed separately in the words, actions, beliefs, and giving practices of a philanthropist. Donor intent is protected in American law regarding charitable trusts, where trustees' primary fiduciary obligation is to carry out a donor's wishes.
Fidelity to donor intent is sometimes distinguished from grant compliance, where “donor intent” refers to the actions of a grantmaking entity and grant compliance refers to the actions of a grant recipient, but the term donor intent is commonly used to refer to both the guiding principles of a grantmaking entity and the purposes of a specific gift.
There have been many controversies, including litigation, over donor intent at private foundations, universities, and arts organizations.
Arguments in favour of donor intent
Donor intent has been defended as a moral obligation between giver and recipient. Defenders of donor intent argue that on a basic ethical level, trustees and gift recipients must do what they have agreed with the original donor to do, explicitly or implicitly. "When donor intent is violated, and particularly when it is egregiously violated, it undermines the bedrock trust on which all charitable giving rests."
Donor intent is thus also defended as necessary to ensure future charitable giving. Future donors may not be inclined to leave money to charitable causes if they see that trustees, grant recipients, or policymakers do not respect the stated intent. "[A]s a policy tool for encouraging future giving,” Peter Frumkin has written, "protection of a donor’s intent is needed to give future philanthropists the confidence they need to pass their wealth on to others to administer." Carl Schramm, former president of the Ewing Marion Kauffman Foundation, has said of donor intent that "[i]f we don’t recognize it, we discourage wealthy people from creating foundations in the future."
Survey data of Americans indicates that donor intent and grant compliance are valued by the public. When asked by Zogby if they would stop giving money to a charity that ignored a request to use a previous donation for a specific purpose, 53 percent said they would "definitely stop giving" and an additional 25.7 percent would "probably stop giving." When pollsters asked "How important do you think showing respect for a donor's wishes is to the ethical governance of nonprofit charitable organizations?," 82.9 percent responded "very important" and 14.6 percent responded "somewhat important."
Finally, respect for donor intent is defended as necessary to preserve pluralism in civil society. "Those who take the idea of donor intent seriously believe that only by protecting the idiosyncratic and at times outlandish ideas of donors will it be possible for philanthropy to innovate and pursue ideas that are either ahead of or behind their time," Frumkin has said.
Arguments against donor intent
Many arguments against donor intent are made against honoring it in perpetuity. Such arguments date back at least to the 18th century and French economist Jacques Turgot: "No work of man is made for immortality; and since foundations, always multiplied by vanity, would in the long run, if uninterfered with, absorb all funds and private properties, it would be absolutely necessary at last to destroy them." While not arguing against donor intent per se, Julius Rosenwald criticized philanthropic funds that are established in perpetuity, arguing that narrowly defined statements of donor intent can be superseded as situations change. “I have heard of a fund which provides a baked potato at each meal for each young woman at Bryn Mawr, and of another, dating from one of the great families, which pays for half a loaf of bread deposited each day at the door of each student in one of the colleges of Oxford. . . . The list of these precisely focused gifts which have lost their usefulness could be extended into volumes.”
Another argument against donor intent relates to whether limitations may be placed on donors’ purposes, either prudential or legal. In Evans v. Abney, the Supreme Court held that Augustus Octavius Bacon’s clearly defined gift of a park to Macon, Georgia, for whites only was illegal under the Civil Rights Act, and thus the gift reverted to Bacon’s heirs. In cases where donor intent can be modified, courts have latitude to do that under cy pres doctrine. Finally, some critics of donor intent argue that to honour in cements economic inequality.
Perpetuating donor intent
Donor intent is considered virtually impossible to be maintained in perpetuity, given changing situations, erosion of capital, and the distance of successor trustees from a donor. In some instances, however, donor intent has been lost only a short time after a donor’s death. Waldemar Nielsen has argued that the Carnegie Corporation of New York swiftly lost the “democratic, hopeful, and constructive” spirit of Andrew Carnegie’s giving: “That within five years of his death his Corporation should have turned into a racist and reactionary machine to defend the privileges of the old WASP elite and block the advancement of immigrants and the underprivileged deformed his spirit and intent.” In the early 2000s, the Daniels Fund, established by Bill Daniels, drifted away from what Daniels’ trustees considered to be his principles, and the drift was arrested by board action. Some donors have adopted strategies to prevent philanthropies that they create from drifting from donor intent.
Sunsetting versus perpetuity
Julius Rosenwald cautioned donors against perpetuity. “I am opposed to gifts in perpetuity for any purpose.” Some donors have attempted to preserve their intent either by “giving while living” or by establishing a date or timeframe in the future by which a foundation must disburse its assets, or “sunset.” Chuck Feeney founded the Atlantic Philanthropies, which is scheduled to spend down its assets by 2017. In 1975, inspired by the controversy over donor intent at the Ford Foundation, John M. Olin adopted plans for his foundation to disburse its assets by 2005. Olin believed that capitalism was the basis of prosperity and sought to promote conservative political and legal thinking. The spend-down plan gave the Olin Foundation the spending profile of a foundation with three times as many assets, Jeffrey Cain has written. “The Olin Foundation made a deliberate decision to have a profound impact on its time, rather than a lighter one that spanned years into the future.”
Carnegie left the Carnegie Corporation’s mission vague and open-ended, instructing his successors to “promote the advancement and diffusion of knowledge and understanding” but also granting “full authority to change policies or causes hitherto aided, from time to time, when this, in their opinion, has become necessary or desirable. They shall best conform to my wishes by using their own judgment.” In creating the John D. and Catherine T. MacArthur Foundation, John D. MacArthur reportedly told his lawyer, “I’ll make [the money]. But you people, after I’m dead, will have to learn how to spend it.” Other donors are much narrower. James B. Duke specified percentages of the annual payout that would go to various categories of giving by the Duke Endowment, even down to a formula for reimbursing charity hospitals. Today, some donors leave detailed documents to supplement official mission statements, including reflections on their principles, video statements, and records of their personal giving.
Trustees and staff
Often, donors select family members, personal business associates, lawyers, or nonprofit leaders to serve on their boards. The Daniels Fund requires trustees to sign a statement affirming that they understand Bill Daniels’ donor intent and will honour it in their decision-making on behalf of the foundation. The foundation created by Lloyd Noble recruits apprentice trustees to shadow the actual board; some of these are elected to the board in the future. At meetings of the Duke Endowment’s board, James B. Duke’s original indenture of trust is read aloud to reinforce his intentions. The John Templeton Foundation has a provision for periodic “donor intent audits” to ensure its officers uphold John M. Templeton Sr.’s purposes.