Gift Acceptance and Due Diligence- the $100M Mistake

At times, it can seem that our job is a bit thankless, upholding donor intent, protecting our organizations from the IRS, and refusing to grant gift terms that can go unfulfilled. But I will tell you from experience, holding the line when others want to blur it is one of my great pleasures. When it comes to fundraising and accepting gifts, I am very risk adverse. I believe strongly in policies and procedures, gift acceptance among them. In case you haven't heard, recently, a university found this out the hard way. 

Portland State University was all set to announce a $100M gift from an "anonymous" donor. The only problem was that this $100M didn't exist, the donor was insolvent, and a simple google search and/or research profile, not to mention gift acceptance committee vetting would have saved them from this embarrassment. Now heads are rolling and the University is under huge media scrutiny. Here are just a few stories about the situation from the press:

http://www.oregonlive.com/education/index.ssf/2015/08/post_28.html

http://www.oregonlive.com/education/index.ssf/2015/08/post_29.html

https://philanthropy.com/article/100-Million-Pledge-to/232515

https://philanthropy.com/article/Portland-State-Fundraisers/232743

What a nightmare. But I have to shake my head and say that someone (many people) was a bit too eager to land a mega-gift. Instead of doing due diligence, vetting the donor properly and sending the proposed gift through a gift acceptance committee for review, they simply ran for the finish line.  We know that transformational gifts take tons of time and effort, years of preparation and relationship building, many discussions and internal vetting, etc. How did this happen? Did greed overtake reason? Where is the research department in this process? 

Donors of this magnitude don't just pop up out of the blue with pots of gold, and if they do, you should be skeptical. As we invest further in donor relations and compliance at many of our institutions, a new position is starting to appear, one of vetting. Whether your organization uses an outside firm to vet potential donors, or does the investigative research in house, it has to be done. 

With all of the media scrutiny it isn't worth it to accept a gift from an unknown entity, we have enough trouble dealing with gifts from individuals that can go wrong (Madoff, Lay, Sterling, Cosby, Petters, Cosby) why accept a gift from someone we haven't researched? What is your gift acceptance policy? How do you go about protecting your organization? Are you involved in the process? It pays to be nosy and not needy.

I would love to hear your thoughts on this massive multi-million dollar mistake.

Cheers,
Lynne