Friday, January 29, 2016

Gift Goes Awry, Donor Sues

In our industry, one of the things I always explain to folks is that donor relations and stewardship, or the lack thereof has real world consequences. This week, we saw an example of that with the Suder Foundation. It reached the New York Times and news of the lawsuit quickly spread across the country and beyond. After giving over ten million dollars away, the Suder Foundation has now seen their programs closed once the money stopped. The problem is, no one informed the foundation in a reasonable and meaningful way.

This speaks volumes for the need for good gift acceptance policies and clear communications when the gift is being brokered. If the money creates the need for additional staffing and programs at your organization, is this something your organization can sustain? If you can't sustain it, then you must make the hard decision of walking away from the money. It is much more costly to have bad press and be sued by a donor than it is to leave the original investment on the table. 

Eleven days after cashing the Suder Foundation's last check, the university terminated the program, stating the need for it to be self sustaining. The donor learned about it in a letter. A letter? Mr. Suder didn't deserve a phone call or a meeting to discuss this? It's interesting the communication path they chose. 

One of the points that should not be lost in this tussle, is that one of the reasons that there is so much confusion is because none of the original staff that negotiated the deal with Mr. Suder and his spouse work at the University. Turnover has come home to haunt our industry in more ways than one. With the average lifespan of a front line fundraiser being 16 months, and the average payment plan for a major gift 5 years, those two things are conflicting and can cause problems way beyond changing relationships. This also speaks to the need for thorough documentation of the negotiations and conversations, each and every one in the database of record. 

I would like to note here that there are more than a few institutions involved here and the donor has had mixed results at many of them, partially because the higher education industry is a complex and ever changing one and the donor didn't understand the process of implementation at universities. He wanted to help first generation students have access to college. I find it sad that in this case those best intentions have gone awry and disappointed the donor. This could discourage others from setting up similar programs. There are many lessons learned here about relationships and the complexity of those. I look forward to hearing about the resolution in this case and hope it is a positive one.

What are your thoughts? How can this help your fundraising administration? This isn't the first lawsuit from a donor and won't be the last. I would enjoy hearing your opinions.



  1. I find this incredibly sad - both that they dropped the ball all along the way in regards to communication but also on the programmatic side. If you launch a program with private grant funding, you know it will run out eventually, so the program leadership should have been working on a sustainability plan all along. It's not easy to replace $10 million, but they should've been able to come up with SOMETHING. And, it's such a disservice to those first generation students - that the intention of the program wasn't important enough to the college to implement a sustainability plan. There was failure all around - programmatic, leadership, fundraising, and donor relations.

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  3. Never will understand not keeping the people who make your mission alive in the loop - good news or bad. Even bad news is a chance to touch base and ask for advice.

  4. Obviously, this is a very sad and cautionary tale. I'm confused, though, as to why the donors weren't gathered in a meeting when more money could've kept the program going...? If they're invested donors in the program...and have demonstrated capacity to make such a large gift...surely they would be open to a CONVERSATION about another gift to sustain the program? I agree with the comments above...never miss a chance to get in front of your donors again, especially in our "time is money" world.

  5. As someone on the programmatic side, this is mind-numbingly frustrating. Donors who insist on everything being sustainable get to reap the glory of creating cool new things without any of the trenchwork involved in keeping it going. They whip institutions into a frenzy to get their money, and then tsk when all the brand new things they insisted be created just for them can't be continued without the cash they so begrudgingly bestowed. There's a really good and pointed blog post about the "sustainability myth" here: