Worcester Polytechnic Institute (WPI) in Worcester, Massachusetts, finds itself in the middle of a dysfunctional family and a post-divorce lawsuit involving its largest donor. Robert Foisie is the largest single donor to his alma mater—a fact evidenced by his name on the college’s school of business, a scholarship program, and the new $49 million building under construction called the Foisie Innovation Studio. Foisie is a 1956 graduate, and has donated $63 million to WPI over his lifetime, including $40 million in 2014 for the scholarship program.
Robert and Janet Foisie divorced in 2011 after 50 years of marriage. Janet is now alleging that Robert hid assets from her during the divorce process, and that some of those hidden assets have been donated to WPI. She has filed suit to stop the college from using the Foisie donations until this can be sorted out.
There are a number of other allegations surrounding Robert Foisie that have nothing to do with his donations to WPI, other than reflecting negatively on his character should the allegations prove true. These include an ongoing wire fraud investigation by the FBI; tax evasion charges by the IRS; an accusation of hiring a hitman to kill one of his adult children; and litigation involving investments and Foisie owned companies.
WPI, like most charitable organizations, assumes that it is honoring fine, upstanding citizens when it puts their name on a building or a scholarship program. But as Inside Philanthropy has reported, unpleasant surprises can emerge after gifts have been accepted and money spent. For example, some institutions struggled with previous gifts from Bill Cosby after his reputation took hit after hit in the press. However, it's a sticky process to change the name of a college or a building after agreeing with the donor on the naming rights. We saw in the Paul Smith’s College proposed name change that the New York Supreme Court concluded that the college did not have the right to violate the terms of the original gift instrument.
Unless WPI had some sort of morals clause in its gift instruments with Robert Foisie, removing his name from the buildings, the school of business and the scholarship program may be difficult at best. Since these cases of a donor gone bad are so new and unusual, it's unlikely that WPI had any clause in its agreements with Foisie that would provide them the unilateral right to change the names.
Should such a clause now become the norm in naming rights gift instruments? The easy answer is "absolutely," but who is going to raise this issue with the donor? And is it plausible that donors would be willing to allow the charitable organization to decide on the quality of their actions years after they have passed away?
If charities want to distance themselves from the tarnished reputations of donors, what are their options? First, they should realize that wealth does not equate to saintliness. And when you chase dollars, you may be going down streets that are not all straight and narrow. Charities could refrain from dangling naming rights in front of potential donors. But naming rights are not just about vanity. They also have value in acknowledging the spirit of generosity from those who have become successful. Therefore, eliminating naming rights does not appear to be a viable answer.
Limiting the duration of naming rights is attractive on a number of levels. If the naming rights expire in, say, 50 years, it affords the charity the opportunity to change the name without resistance from the courts or heirs. Regardless of what happens to the donor’s reputation, the name is not forever. Limited-duration rights also allow the charity to raise funds multiple times, affording the institution the opportunity to raise needed capital for major repairs many years down the road. Some donors may insist on perpetuity, but if limited duration naming rights become the norm, rights in perpetuity will be sought less frequently.
Where does this leave WPI today? The school has acknowledged the rumors and litigation. It has also acknowledged that the truth is yet to be decided, and are therefore doing nothing for the time being. This appears to be the correct course of action. As far as the charge of having received assets hidden in a divorce proceeding, WPI is an innocent bystander. There may be consequences for Robert Foisie if it is proven that he hid assets during the divorce proceeding. Nothing I have read, however, leads me to believe that a refund from WPI is a potential consequence of such an action.