Princeton Settles Legal Battle Over Alleged Misuse of Gift

Princeton Settles Legal Battle Over Alleged Misuse of Gift

Ending a long legal battle over how closely a university must adhere to the terms of a gift, Princeton has reached a settlement with heirs to the A&P grocery fortune, allowing the university to keep the bulk of a fund worth hundreds of millions of dollars, the New York Times reports.

The suit stems from a $35 million endowment gift the university received in 1961 from grocery heirs Charles and Marie Robertson. At the time, the Robertsons stipulated that the money should be used to educate graduate students for careers in government at the Woodrow Wilson School of Public and International Affairs. But in a lawsuit filed in 2002, the Robertsons' descendants claimed that Princeton had ignored the terms of the gift — the value of which peaked at more than $900 million in June — by spending the funds on training students for a broader range of careers.

Under the settlement, Princeton will pay $40 million in legal fees and, starting in 2012, another $50 million as well as $11 million in interest to a new foundation that will support education for government service. Princeton will be able to use the remainder of the gift money as it chooses.

The case had been closely watched by many universities and colleges. Although the suit did not produce a court ruling that would have established guidelines for honoring donor intent, it did highlight how difficult and costly it can be to challenge wealthy universities. Even without going to trial, each side spent more than $40 million in legal fees.

Some experts noted that the case could have had significant impact on giving practices around the country if the Robertsons had prevailed. "If there'd been a ruling and Princeton had lost," said Richard A. Mittenthal, president of nonprofit consulting firm TCC Group, "other donors who felt damaged might feel they had reason to go to court."

Tamar Lewin. "Princeton Settles Money Battle Over Gift." New York Times 12/10/2008.