Donors Demand Return of Historic $100M University Donation

March 5, 2018; Bloomberg

This is an ironic story about a $100 million charitable donation to fund the establishment of the Pearson Institute for conflict-resolution research that is aimed at promoting peace. The gift, which in 2015 was the second-largest in the history of the University of Chicago, was made by twin brothers Thomas L. and Timothy R. Pearson. Two years later, the parties themselves are in conflict. The family’s foundation is suing to reclaim the $22.9 million it has paid to date on the commitment, based on the donors’ perception that the institute has hired underqualified academic and executive staff and has plans to pass along some of the donated funds to the Harris School of Public Policy out of which it is housed. The donors also, they complain, have not been invited to 22 of the 24 events hosted by the institute to date.

All of this makes the case reminiscent of Charles and Marie Robertson’s suit against Princeton for mismanaging a $35 million endowment intended to help prepare students for careers in government (Doug White’s book, Abusing Donor Intent, is a great read about that dispute). At the time, that gift was the largest ever given to a university, and many of the same issues about donor intent versus university sovereignty were present.

“As a result of having breached its obligations and having engaged in deliberate misrepresentations over a period of more than two years, the U. of C. has caused the foundation to lose all confidence that the U. of C. is an appropriate or capable steward of the Pearson Family legacy,” the lawsuit states.

The university’s response says, “In the short time since its formation, the Institute has hosted dozens of events, enrolled more than 200 students in courses related to the study of global conflict, and fostered an engaged community of scholars. The remarkable faculty, staff, and students at The Pearson Institute will continue their important and meaningful work with the full support and endorsement of the university.”

“The Pearsons believe their story is a cautionary tale that should give pause to any family, philanthropist, benefactor, or donor who is considering granting a university any amount of money—large or small,” the foundation said in an emailed statement.—Ruth McCambridge