"Millions for Colleges, Not a Cent for Publicity" read the headline in The New York Times. The story, published in April 2009, described an educational mystery that was delighting colleges and universities across the country.
The delight stemmed from the unexpected receipt of millions of dollars for scholarships and unrestricted purposes. Other than the scholarship set-asides, the donation carried only one requirement. The donor had to remain anonymous — not as in those "Anonymous" listings at the top of an annual list of donors, but anonymous even to the institution itself, including the president and the trustees. The checks came in regular mail from banks and law firms, with letters that contained no clue as to the donor. The letters did include a stipulation that the institution had to accept the gift without knowing the source of the contribution.
Understandably, the gifts were received with glee — although a spokesperson for one university did say that "the person opening the mail had quite a shock."
As hard as it is to say these words, those gifts should have been declined if attempts failed to find a way to reach the donor and pledge confidentiality within the institution. An institution's executive management and its trustees, who have the ultimate responsibility for the institution's governance, must be able to know the identity of its donors, even if they agree not to extend that knowledge beyond the president and the board.
According to The Times and other media outlets, two dozen or so institutions, both public and private, in states from Alabama to Alaska, have received anonymous gifts ranging from $1.5 million to $10 million. Knowing the source of gifts is glaringly important when the gifts are of such magnitude, but on the scales of good governance, the amount is secondary to the source.
Some sources are illegal. (One university did check with the Internal Revenue Service and the Department of Homeland Security before cashing the check.) Some are unethical, and receiving a gift from an unsavory giver can cause an institution more public relations harm than the gift is worth.
It's acceptable for a donor to remain anonymous to the public, and there are understandable reasons for such requests. The Indiana University Center on Philanthropy says the most dominant reasons stem from family concerns or a desire to avoid solicitations from other charities.
Furthermore, if anonymity is promised, that promise must be kept — another clear responsibility for a trustee. The American Civil Liberties Union had a long-time major anonymous donor who gave millions each year. He suspended his annual contribution in 2009 due to the economy — I know I'm using the word "his" accurately because several board members publicly identified him, contrary to the pledge they had made to keep the donor's identity to themselves. Such a breach is sufficient reason for those trustees to be removed from the board.
Tough love, I know. I was a trustee of an umbrella nonprofit organization several decades ago when an anonymous gift was announced to the board — but the board was told it could not know the donor's identity. I challenged the organization's president on that and lost a vote to require disclosure to the board with an accompanying requirement that board members keep the donor's identity confidential.
But it's just that plain to me. Most nonprofits clearly need more financial support. But that doesn't justify abdication of a trustee's responsibility for meeting the highest standards of accountability, including accountability for an organization's financial resources.
The New York Times published a letter from Ridings in response to the article about anonymous donors. The original article, with a revised headline, is online at www.nytimes.com/2009/04/25/education/25donor.html. Ridings' letter is at www.nytimes.com/2009/05/05/opinion/l05donor.html.