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Vol. LXII, No. 51
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Wednesday, December 17, 2008
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Vol. LXII, No. 51
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Wednesday, December 17, 2008
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Ending a six-year lawsuit, Princeton University and the Robertson Family have reached a settlement agreement that will dissolve the Robertson Foundation, reimburse the Banbury Fund for legal expenses incurred, and create a new foundation.
Most of the monies from the Robertson Foundation will go into an endowment fund at Princeton that will be controlled by the University.
In addition, the Foundation will reimburse the Banbury Fund, a foundation that is run by the Robertson family, $40 million for legal expenses incurred. The first settlement payment is scheduled for 2009 and will be $20 million, while $10 million per year will be transferred in the following two years.
The remaining portion of the settlement, totaling $50 million plus interest, will create the new charitable foundation operated by the Robertson family to assist students in preparing for governmental service. Payment will begin in 2012 and will continue for seven years.
The Robertson Foundation was created in 1961 when Marie Robertson donated $35 million to the University to support the graduate program at the Woodrow Wilson School.
Decisions are made by the Foundation’s board, four members of which, including University president and Board Chair Shirley Tilghman, were appointed by the University, and three of which were appointed by the Robertson family.
In 2002, a vote to change the investment strategy, namely, engaging in professional management of the endowment by the Princeton University Investment Company (PRINCO) split the board. The three Robertson-appointed members filed a lawsuit against three University-appointed board members as well as the University itself, claiming that the University was not handling the monies as the donor had intended.
Between the time PRINCO managed the Foundation’s investments beginning in 2004, and the end of fiscal year 2008, the endowment grew from $561 million to more than $900 million, though currently the University acknowledges that “the endowment has not been immune to the economy since the last reporting period.”
In a release, William Robertson, the lead plaintiff of the Robertson v. Princeton case said that “this is a message to nonprofit organizations of all kinds and throughout our country that donors expect them to abide by the terms of designated gifts or suffer the consequences.”
A trial date had been scheduled for January 20, 2009, but according to Ms. Tilghman, the University “agreed to this settlement so that we could bring the rapidly escalating legal expenses to a halt before a lengthy trial added even more tens of millions of dollars.” It is estimated that each side would have spent an additional $20 million had the case gone to court.
Even so, Ms. Tilghman described the “expenditure of tens of millions of dollars in legal fees” over the past six years “that could have and should have been spent on educational and charitable purposes” as “tragic.”