5 Donor Flaps: They Gave to Colleges, They Regretted

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

ByABC News
March 8, 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.