Another Donor Revokes a Mega-Gift. Is a Pattern Developing?

 photo: Pepsco Studio/shutterstock

photo: Pepsco Studio/shutterstock

In a recent post reporting on Timothy and Thomas Pearson rescinding their $100 million donation to the University of Chicago, I wondered if the news foreshadowed a future in which a new breed of more hands-on mega-donors revokes gifts with greater frequency due to dissatisfaction with the recipient organization.

Coincidentally enough, the same day the Pearson post hit, the Sanford Burnham Prebys (SBP) Medical Discovery Institute in La Jolla, California announced that an anonymous donor canceled $75 million from a record $275 million gift to the institute in 2015. 

According to the San Diego Tribune, the money was earmarked to speed drug development.

As previously noted, revoking a gift can be a messy process, although a closer look at the SBP revocation reveals little about whatever fireworks may have exploded behind the scenes. For instance, while the Pearson brothers articulated a long list of grievances against the University of Chicago, the anonymous donor in question here did not stipulate reasons for the cancellation.

What's more, while the University of Chicago publicly addressed and pushed back against the brothers' revocation, SBP never disclosed the $75 million cut. Writing in the San Diego Tribune, Gary Robbins notes that the cancellation appeared in a financial review of the institute by the accounting firm Deloitte.  

"Institute executives also did not disclose the cut during a 2016 interview with the Union-Tribune that focused on financial problems that SBP is having at its satellite campus in Orlando, Florida," Robbins wrote.

In October 2016, institute officials said they were unable to secure sufficient donations and funding from the National Institutes of Health to make the branch flourish. The campus opened more than a decade ago with $300 million in incentives from various stakeholders in Florida.

Did the campus' financial troubles have anything to do with the anonymous donor's revocation? Again, we don't know, but as the Chronicle of Philanthropy's Maria Di Mento noted, "$75 million is a lot of money. It can do a lot, it can endow a lot. If the donor wanted to make a point, this is a good way to do it."

Regardless of the donor's motivation, it's worth remembering that he/she is still on the hook for $200 million. And unlike the representatives from the University of Chicago, who plan to take the Pearsons to court if necessary, SBP President Kristiina Vouri suggests the lines of communication remain open with their anonymous benefactor.

"The $275 million is a 10-year pledge, and therefore, a work in progress," she said. "We are highly confident that in time, the $275 (million) pledge will be fully reinstated."

While Vouri may be confident about a positive outcome for SBP in this situation, institutions everywhere should pay close attention to revoked gifts. Each of these cases is surrounded by unique circumstances, and it's risky to generalize about donor motivations for pulling the plug on big commitments (or asking for the money back years later.) 

But if we were to offer a general theory of such cancellations, which do seem to be on the rise, it would center on the rise of more demanding and controlling mega-donors. Many of today's big givers aren't interested in a "fire-and-forget" approach to philanthropy, whereby benefactors make the large gift, attend the news conference, and then fade quietly into the background. Instead, they're more likely than in the past to keep close tabs on things to ensure that their money is well spent. Often, too, they want to be actively involved in helping big new initiatives succeed, tapping their own skills and networks to move the ball forward. 

While everyone wants more donor engagement, there are obvious downsides to too much engagement by big givers, who are often hard-driving business types used to getting their way. These donors may decide they don't like how the sausage gets made at a large nonprofit institutionwhich, let's face it, aren't always the fastest moving entities. They may even forget that it's no longer their money that's being spent and that they don't get to call shots. 

Again, it's hard to generalize about how big gifts can go wrong or who's really to blame. But one thing seems clear: As donors become more demanding, the importance of clear expectations and detailed gift agreements is growing. It's one thing to work out agreements that get filed away and forgotten. It's another to be thinking about a roadmap for navigating a relationship that could turn very contentious.