Donor intent is the purpose, sometimes publicly expressed, for which a
philanthropist
Philanthropy is a form of altruism that consists of "private initiatives for the public good, focusing on quality of life". Philanthropy contrasts with business initiatives, which are private initiatives for private good, focusing on material ...
bequest
A devise is the act of giving real property by will, traditionally referring to real property. A bequest is the act of giving property by will, usually referring to personal property. Today, the two words are often used interchangeably due to thei ...
. 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, and trustees' primary fiduciary obligation is to carry out a donor's wishes.
Donor intent is distinguished from “grant compliance”, where donor intent refers to the actions of a grantmaking entity and grant compliance to the actions of a grant recipient.
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
A university () is an educational institution, institution of tertiary education and research which awards academic degrees in several Discipline (academia), academic disciplines. ''University'' is derived from the Latin phrase , which roughly ...
, and arts organizations.
Arguments in favor
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 might not be inclined to leave money to charitable causes if they see that trustees, grant recipients, or policymakers do not respect the stated intent. Peter Frumkin has written that "as s a policy tool for encouraging future giving, 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
The Ewing Marion Kauffman Foundation (Kauffman Foundation) is a registered 501(c)(3) nonprofit, private foundation based in Kansas City, Missouri. It was founded in 1966 by Ewing Marion Kauffman, who had previously founded the drug company Ma ...
, has said on donor intent, "If we dont 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% said they would "definitely stop giving" and an additional 25.7% 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% considered it "very important," 14.6% "somewhat important."
Finally, respect for donor intent is defended as necessary to preserve pluralism in
civil society
Civil society can be understood as the "third sector" of society, distinct from government and business, and including the family and the private sphere.
Arguments against
While not arguing against donor intent ''per se'',
Julius Rosenwald
Julius Rosenwald (August 12, 1862 – January 6, 1932) was an American businessman and philanthropist. He is best known as a part-owner and leader of Sears, Roebuck and Company, and for establishing the Rosenwald Fund, which donated millions i ...
(1862-1932) criticized philanthropic funds that are established in perpetuity for a specific purpose only, 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
Oxford () is a City status in the United Kingdom, cathedral city and non-metropolitan district in Oxfordshire, England, of which it is the county town.
The city is home to the University of Oxford, the List of oldest universities in continuou ...
.... The list of these precisely focused gifts which have lost their usefulness could be extended into volumes."
Courts have intervened when donor intent has been found to be at odds with the law. In ''Evans v. Abney'', the Supreme Court held that Augustus Octavius Bacon's clearly defined gift of a park to
Macon, Georgia
Macon ( ), officially Macon–Bibb County, is a consolidated city-county in Georgia (U.S. state), Georgia, United States. Situated near the Atlantic Seaboard fall line, fall line of the Ocmulgee River, it is southeast of Atlanta and near the ...
, for whites only was illegal under the
Civil Rights Act of 1964
The Civil Rights Act of 1964 () is a landmark civil rights and United States labor law, labor law in the United States that outlaws discrimination based on Race (human categorization), race, Person of color, color, religion, sex, and nationa ...
and so the gift reverted to Bacon's heirs. In cases that donor intent can be modified, courts have latitude to do that under '' cy pres'' doctrine.
Perpetuating donor intent
Donor intent is considered virtually impossible to be maintained in perpetuity because of 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
The Carnegie Corporation of New York is a philanthropic fund established by Andrew Carnegie in 1911 to support education programs across the United States, and later the world.
Since its founding, the Carnegie Corporation has endowed or othe ...
swiftly lost the "democratic, hopeful, and constructive" spirit of
Andrew Carnegie
Andrew Carnegie ( , ; November 25, 1835August 11, 1919) was a Scottish-American industrialist and philanthropist. Carnegie led the expansion of the History of the iron and steel industry in the United States, American steel industry in the late ...
'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
A wasp is any insect of the narrow-waisted suborder Apocrita of the order Hymenoptera which is neither a bee nor an ant; this excludes the broad-waisted sawflies (Symphyta), which look somewhat like wasps, but are in a separate suborder ...
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, establishing a multitiered bureaucracy with independent fiefs making decisions by their own rules.
Recognizing what had developed, the board hired a new president, who explained what he was facing:
“For example, the staff had unilaterally decided to stop supporting certain organizations, disregarding entirely the fact that Bill had admired and funded those exact organizations during his lifetime.” Ultimately, the board was able to arrest the drift.
Some donors have adopted strategies to prevent philanthropies that they create from drifting from donor intent.
Sunsetting versus perpetuity
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
Charles Francis Feeney (April 23, 1931 – October 9, 2023) was an Irish-American businessman and philanthropist who made his fortune as a co-founder of Duty Free Shoppers Group, the travel retailer of luxury products based in Hong Kong. He wa ...
founded the
Atlantic Philanthropies
The Atlantic Philanthropies (AP) was a private foundation created in 1982 by American businessman Chuck Feeney. The Atlantic Philanthropies focused its giving on health, social, and politically left-leaning public policy causes in Australia, Berm ...
, which is scheduled to spend down its assets by 2017.
In 1975, inspired by the controversy over donor intent at the
Ford Foundation
The Ford Foundation is an American private foundation with the stated goal of advancing human welfare. Created in 1936 by Edsel Ford and his father Henry Ford, it was originally funded by a $25,000 (about $550,000 in 2023) gift from Edsel Ford. ...
, John M. Olin adopted plans for the John M. Olin Foundation to disburse its assets by 2005. Olin believed that capitalism was the basis of prosperity and sought to promote
conservative
Conservatism is a cultural, social, and political philosophy and ideology that seeks to promote and preserve traditional institutions, customs, and values. The central tenets of conservatism may vary in relation to the culture and civiliza ...
political and legal thinking.
The Olin Foundation made a deliberate decision to have a profound impact on its time rather than spreading it out lightly over the perpetual future," adopting a spend-down plan that gave it the spending profile of a foundation with three times as many assets through its sunset.
Mission statements
A specific
mission statement
A mission statement is a short statement of why an organization exists, what its overall goal is, the goal of its operations: what kind of product or service it provides, its primary customers or market, and its geographical region of operation ...
is not always part of establishing a charitable trust.
Carnegie left the Carnegie Corporation's mission vague and open-ended by 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 he 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
The Duke Endowment is a private foundation established in 1924 by industrialist and philanthropist James B. Duke. It supports selected programs of higher education, health care, children's welfare, and spiritual life in North Carolina and South ...
, including even a formula for reimbursing charity
hospital
A hospital is a healthcare institution providing patient treatment with specialized Medical Science, health science and auxiliary healthcare staff and medical equipment. The best-known type of hospital is the general hospital, which typically ...
s. 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 honor it in their decision-making on behalf of the foundation. The foundation that was created by Lloyd Noble recruits
apprentice
Apprenticeship is a system for training a potential new practitioners of a Tradesman, trade or profession with on-the-job training and often some accompanying study. Apprenticeships may also enable practitioners to gain a license to practice in ...
trustees to shadow the actual board; some 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
The John Templeton Foundation (Templeton Foundation) is a Philanthropy, philanthropic organization founded by John Templeton in 1987. Templeton became wealthy as a Contrarian investing, contrarian investor, and wanted to support progress in relig ...
has a provision for periodic "donor intent audits" to ensure its officers uphold
John Templeton
Sir John Marks Templeton (29 November 1912 – 8 July 2008) was an American-born British investor, banker, fund manager, and philanthropist. In 1954, he entered the mutual fund market and created the Templeton Growth Fund, which averaged gro ...
Private foundation
A private foundation is a Tax exemption, tax-exempt organization that does not rely on broad public support and generally claims to serve humanitarian purposes.
Unlike a Foundation (nonprofit), charitable foundation, a private foundation does no ...