Yale gift continues trend to restricted donations

March 24, 1995

American millionaires who donate large sums of money to their alma maters are increasingly doing so with strings attached. So the decision of Texas billionaire Lee Bass to give $20 million (Pounds 13 million) to Yale University for a new programme in Western civilisation was not so unusual but to ask for it back was "aberrant", according to Peter Buchanan, president of the Council for Advancement and Support of Education.

"Restricted gifts are certainly growing in the country and have been for a long while," Mr Buchanan explained.

Figures show that donations with strings attached have more than doubled since 1975, while the volume of gifts without strings has remained flat over that time. Over the 15 years from 1975 to 1990 unrestricted gifts have stayed at the $0.5 billion a year level, whereas restricted gifts have soared from $1 billion to more than $2 billion annually.

The reason for this shift, according to fund raisers, is that money is so tight in public and private American colleges that private philanthropy is the only answer to making ends meet. The economic pressure pushes institutions to ask for larger and larger sums from rich alumni.

And rich men giving significant amounts to their alma maters are much more likely to want the money to go to pet projects. "It's human nature," Mr Buchanan says.

Twenty years ago a gift of $20 million was considered enormous. Today it is small beer. Last week John Loeb, 92, founder of a Wall Street firm, announced a gift of $70.5 million to Harvard. Some of the money is going on teaching and financial aid and the rest is devoted to favourite items - to boost the graduate school of design, to support the library named after his wife, to expand the Loeb fellowships in advanced environmental studies, and so on.

What was much more unusual about the Yale case was Mr Bass's decision to ask for his donation back four years after he had donated it. "This is absolutely aberrant," Mr Buchanan said.

The $20 million gift had been solicited by former Yale president, Benno Schmidt, who was unpopular with students and staff. After the gift was announced, Yale underwent enormous changes in its administration. The president left, the deans and provosts changed and the leadership on the board of trustees changed hands.

Mr Bass was left in the dark about what was going on and became impatient. His recent demand that he be allowed to approve the academic staff for the Western civilisation courses was too much for the university, and the deal fell apart.

Everyone agrees this was a shame for Yale, which needs all the help it can get. The university is running a $12 million deficit this year, and it may now have to find money to pay the five professors recruited to teach the Western civilisation courses.

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