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Undocumented Endowments

  • 1.  Undocumented Endowments

    Posted 06-22-2021 04:25 PM
    Hi all,

    I'm interested in hearing how other institutions handle endowments that aren't fully documented. My university has run into this same situation with a few different fact patterns, but the one I'm most interested in getting input on is below:

    • Donor sits down with gift officer and discusses idea of a named endowed scholarship. The donor and gift officer jot down some ideas. 
    • Gift officer comes back to Advancement Services team to get an endowment agreement drafted, sends that along to the donor. 
    • Donor sends in full payment to the Donor Endowed Scholarship but doesn't sign the agreement or send it back.
    • Donor no longer responds to communications from gift officer.
    ​​The donor has met our endowment minimum and designated the gift to their endowed scholarship, but we have no guidance on how that endowment should be used. We could use the draft agreement but that seems risky from a legal standpoint. 

    I plan on running this by our general counsel, as we've seen similar situations multiple times now, but I'm curious how other institutions handle this type of situation. Any advice?

    Thank you,
    Tori

    ------------------------------
    Tori Sellner '12, '19 MSL | Associate Director of Gift Accounting
    University of St. Thomas, University Advancement
    2115 Summit Ave, Mail DEV | St. Paul, MN 55105
    p (651) 962-6899 | f (651) 962-6996
    ------------------------------


  • 2.  RE: Undocumented Endowments

    Posted 06-22-2021 06:02 PM
    Well, this is tricky. Depending on the situation this can go many ways. So yep, this is a depends. 

    Note I am not a lawyer and I don't know MN laws. So please talk to your lawyers.

    Even though the gift agreement is not sign whatever documentation you have from the donor is called the "legal gift instrument". So, you have to abide by that documentation until ...Well it gets tricky. If it's in a gift agreement you cannot typically use the savings clause because the donor did not sign it. You can only use the intent. In 2021, I would not but the agreement in action until I have something signed or written documentation from the donor.

    However, I have seen many that have been in action without documentation because it was over 20 years ago.

    I have had a few cases where there is no agreement but just a memo because the thing is so old it was before agreements. It's has interest but we can't spend it. 

    The biggest thing to note. Once you award it once you are stuck. Even though the donor did not sign you will need to amend the agreement. So, if you cannot reach the donor or they are deceased and you have no money or documentation or the documentation is not usable.

    Congratulations you will probably will need to go to court. If the donor is alive and want talk to you or is dead, gave you the money, it's met their minimum and you don't have a gift agreement or something with gift intent (even a pledge), you are probably looking at going to court. 

    There is a few ways this can play out. Feel free to call. My phone is +12813840358. Again not an expert at MN law but that is what I see happen here.





  • 3.  RE: Undocumented Endowments

    Posted 06-22-2021 06:28 PM
    Sarah is correct, as usual!  And she's also correct in suggesting you need to seek counsel on this.  Some states consider oral agreements to be binding contracts.  That can be especially true if there's a paper trail.

    Your best course of action - depending on what your attorney says - is to contact your State Attorney General.  In fact, that is the office you can seek relief from if you can no longer use an endowment in the way it was originally intended and no family representatives can be located.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987