St. Olaf College Case Highlights Troubles with Restricted Gifts

Litigation over whether charities can change the use of restricted gifts is becoming more common and the legal issues involved more complex. The most visible of these cases over the past few years has been the litigation involving Princeton and the Robertson Foundation over the Woodrow Wilson School of Public and International Affairs. In this case, the Robertson family has argued that Princeton violated the terms of the gift that funded the Wilson School (originally $35 million, now almost $800 million, and more than 5% of Princeton’s total endowment). The Robertson family has a whole website devoted to the litigation herehere. See also the prior blog post regarding Professor Iris Goodwin’s article about the Princeton litigation here.

Now a trial judge in Minnesota has taken both the Minnesota Attorney General and St. Olaf’s College to the woodshed regarding St. Olaf’s sale of WCAL, its public radio station (which St. Olaf sold to Minnesota Public Radio). St. Olaf’s had sought to remove the restrictions on certain gifts to the college that were for the benefit of supporting WCAL, and the judge in this case refused St. Olaf’s request with respect to several of the gifts in question (the judge did permit certain gifts to be used to support St. Olaf’s production of certain radio shows that would continue to be broadcast over the MPR network).

In the opening part of his opinion, Judge Gerald Wolf stated,

The Minnesota Attorney General is the watchdog of all trusts throughout the state of Minnesota. Deplorably, when St. Olaf made the decision to sell WCAL, no one from the Attorney General’s Office intervened to safeguard the trust. The Attorney General’s Office was notified by SaveWCAL of the pending sale yet they failed to do anything. The undersigned is absolutely mystified as to why the State Attorney General did not become involved in a sale of trust assets valued at $12 million when it is its statutory obligation to do so.

The undersigned does recognize that there is a newly elected Attorney General who was not in office at the time of the sale. However, the office is painted with the same brush. Her office is tainted with this lapse of duty even though she did not hold her present position at the time. Regardless of who was serving as Minnesota Attorney General at the time of the sale, the office as an institution has a duty to the people of Minnesota to serve as guardian of all trusts created and operated in this state. The Minnesota Attorney General’s Office failed in its duty in this case.

Ouch!

The opinion in the case is available here (fairly large PDF file with a fairly slow link, so give it time to load).

JDC