5 Donor Flaps: They Gave to Colleges, They Regretted

A person donates money, and expects their wishes to be granted.

March 08, 2013, 11:28 AM

March 8, 2013— -- intro: It's kind of a no-brainer: A person donates big money to a specific institution, and expects their wishes to be granted.

Except that doesn't always happen. And some donors get really annoyed.

Consider the case of Dallas businessman Scott K. Ginsburg, who this week sued Georgetown University for $7.5 million, claiming the school went back on a promise to name the law school gym after him. Ginsburg alleges that in 2000, he agreed to donate $5 million to his alma mater provided they gave him naming rights of the new building at the Georgetown University Law Center.

In his federal lawsuit, Ginsburg alleges that Georgetown backed out of the deal after the SEC secured an insider-trading judgment against him, which, he maintains, he told the university before the donation. In his complaint, Ginsburg claims that Georgetown said it would still name the building after him. He signed a second contract in June 2003 pledging another $11 million.

Ten years later, the school has still not named the center after him. And so Ginsburg is seeking $7.5 million and punitive damages for breach of contract, fraud and fraudulent inducement.

Cases like this are becoming increasingly common, Stacy Palmer, editor of The Chronicle of Philanthropy, told ABC News. "There have been a lot of lawsuits over the last decade as donors become more and more concerned about how their money is being used," she said. "Usually, the board of the non-profit has to approve a gift of $1 million or more, because everybody wants to agree that these are things we want to do. Once you sign the check over, the institution should certainly follow your wishes."

But, she added, "It's not in your hands anymore, it's in the hand of the non-profit."

Georgetown declined to comment.

According to Ken Berger, president and CEO of Charity Navigator, Americans donate about $300 billion a year annually. Universities and other educational institutions get about 20 percent—an estimated 60 billion—of those gifts. Should a lawsuit arise, typically the person or institution with the "deeper pockets" prevails, he said.

Ginsburg is not the only donor to sue a university. Here are some notable donor lawsuits amid the hallowed ivied halls.

quicklist: title: Columbia Universitytext: In 1927, a group of Italian-American families donated $400,000 to build La Casa Italiana, the "Italian House," on university property. Last August, descendents sued the school for reportedly not using the money to as the benefactors had requested.

According to court documents, the "simple and unambiguous" mission of the house was for it to be university's "centre and seat of its work in the field of Italian language, literature, history and art." Today's use of the building is "off- track," the complaint says.

A Columbia spokesperson would not comment on pending litigation.

quicklist: title: University of Connecticuttext: In Jan. 2011, Connecticut businessman Robert G. Burton demanded that the University of Connecticut return $3 million he donated to the school--and remove his name from the Burton Family Football Complex—because he was unhappy about the firing and hiring of the football coach.

In a five-page letter to the university's athletic director, Burton wrote that he had not been "involved in the hiring process for the new coach," per his request. A public battle ensued, but the two parties were able to amicably resolve their issues.

As U Conn spokesman Michael Kirk noted in a Feb. 2011 release, "The University of Connecticut, longtime UConn donor Robert G. Burton, Sr. and his family have agreed to move past their differences and continue their longstanding relationship."

quicklist: title: Strake Jesuit College Preparatory School text: In 1973, Dr. Michael Bardwil graduated from Strake Jesuit College Preparatory School, in Houston. He wanted his son to follow in his academic footsteps. Over the years he met with administrators and gave the school a $40,000 gift, ostensibly to help ensure his son's admittance, according to court papers. But his son was denied entry, and in December, 2010, Bardwil sued the school, asking for his money back and claiming "common law fraud" and "negligent misrepresentation."

"Obviously I feel like I was misled and a certain sense of betrayal, but I think that it's also important to let other people know about this too," Bardwil told ABC News affiliate KTRK-TV.

Rick Rivers, a spokesperson for the school, said that he had not heard anything further since the school asked for a summary judgment last year.

quicklist:title: Tulane Universitytext:H. Sophie Newcomb Memorial College was founded in 1886 by Josephine Louise Newcomb in honor of her daughter, Sophie, who had died 16 years earlier. Originally, the school was a separate part of Tulane University; Newcomb had given $100,000 to the Tulane Board of Administrators, which the University accepted along with the "terms and conditions" for the donation. Over the next 15 years Newcomb donated $3,626,551 (that would be more than $75 million today) to Tulane to maintain the women's college. All was well until 2006, when Hurricane Katrina wreaked havoc on the college campus and Tulane merged the two colleges.

A handful of people sued, arguing the school had violated the terms of the donation agreement by turning it coed.

In August, 2009, a Louisiana state judge dismissed the lawsuit seeking to force Tulane to reopen Newcomb as a separate college for women. An appeals court upheld that decision. The plaintiffs pressed on, but in 2011, the Louisiana Supreme Court ruled in favor of Tulane.

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