The charitable Scrooge: Failure to honor benefactors' wishes will dampen the giving spirit
From the earliest days of our nation, Americans have been a generous people. In 2012 alone, according to Giving USA estimates, Americans donated $316 billion to charity.
At no time is this generosity more evident than during the Christmas season, when nearly 60 percent of all Americans make charitable contributions, ranging from loose change dropped into Salvation Army buckets to multimillion-dollar donations.
Whether it's a child who receives a $10 Christmas toy from Toys for Tots or a college student who will receive financial aid from the $350 million New York City Mayor Michael Bloomberg pledged to Johns Hopkins University last year, millions of Americans rely on the support and assistance provided by our nation's more than 2.3 million charities.
That's why my family's story is so troubling. It indicates that all is not right in the nonprofit world and threatens to dampen America's giving spirit.
At issue is the centuries-old concept of “donor intent” — meaning that when a charity accepts a donation for a specific purpose, it has an obligation to use it for that purpose and no other. Since individuals give mainly because they are passionate about a particular cause, failure to use their money as intended will discourage future giving. As Warren Buffett told Fortune a few years ago, “If people see donor intent get ignored or twisted, it has to discourage philanthropy.”
Unfortunately, the very institution Mayor Bloomberg has so generously supported is one of the most blatant violators of donor intent. And I should know because the gift came from my family.
My late aunt, Elizabeth Beall Banks, in collaboration with her family, donated a 138-acre Civil War-era farm in the heart of Montgomery County, Md., a Washington suburb, to Johns Hopkins University. At the time of the gift, Belward Farm was worth more than $50 million, yet she gifted the farm to Hopkins for less than one-tenth its value. Elizabeth Banks, a lifelong schoolteacher of modest means, made this generous charitable contribution of her only asset because the university promised that Belward Farm would be preserved from development and turned into an open, parklike academic campus. Everyone, including my fiercely anti-development aunt, was satisfied.
As a news story at the time put it: “Her profound love of the land led to great concern over its eventual fate. Wooed over the years by numerous interested parties, she found none that met her strict requirements until Johns Hopkins approached her with a plan that was not only acceptable but pleasing. The plan calls for preserving as much open space as possible in a campus-like setting.”
Fast-forward two decades. My aunt, sadly, passed away in 2005. Once she was gone, despite a contract and deed spelling out the plans for the property, Johns Hopkins announced its intention to build a nearly 5-million-square-foot commercial development with 23 buildings and three parking garages on the property. The university has no plans, to date, to occupy even a single square foot of the property.
Despite having limited funds, my family and I have been pursuing the matter in court since 2011. We are currently asking Maryland's highest court, the Court of Appeals, to review the case and force Johns Hopkins to live up to the promises it made.
If my family's gift to Hopkins was the only one that had gone awry, it might easily be dismissed as an isolated incident.
But it's part of a pattern; abuses of donor intent are all too common. In just the past couple of decades, numerous nonprofit institutions — including the Barnes Foundation (Philadelphia), Boston University, Columbia University, Fisk University, Harvard University, the Metropolitan Opera, N.C. State, Princeton University, Randolph College, St. Luke's Hospital, St. Olaf College, Tulane University, UCLA, the University of New Mexico, the University of South Dakota, the University of Southern California and Yale University — have been accused of violating donor intent. And this is just a partial list.
The Maryland Court of Appeals needs to take our case and signal that it will stand up for donors. This will allow donors to maintain the confidence they have in giving to worthy nonprofit organizations. Nonprofits, like Johns Hopkins, should not be allowed to benefit from contributions where the donors' intentions have been ignored.
This will discourage charitable giving, harming those who depend on it.
Tim Newell, nephew of Elizabeth Beall Banks, is lead plaintiff in John Timothy Newell, et al. v. Johns Hopkins University, a lawsuit seeking to protect Belward Farm.