Poisoned Ivy Fight at Princeton Escalates Over Use of a Family’s Gift

PRINCETON, N.J.—On April 4, 2002, a top adviser to Shirley M. Tilghman, the president of Princeton University, warned her against antagonizing one of the school’s biggest donors—the Robertson family, heirs to the A&P supermarket fortune.

The Robertsons had given the university $35 million in 1961. They had complained for years about what they perceived as Princeton’s failure to use the money for its intended purpose: training graduate students at the Woodrow Wilson School of Public and International Affairs to serve in the federal government, particularly in foreign relations.

In an email to Ms. Tilghman, university secretary Thomas H. Wright called her attention to a document about to be disclosed to the Robertsons. The document said $750,000 from the gift fund was paying for students’ tuition outside the Wilson School and other purposes. That would “greatly upset” the family, Mr. Wright said, adding that the university should decide “fast” whether to disclose it.

Princeton now acknowledges that it revised the document so the outlays weren’t disclosed to the Robertsons. It says the lack of disclosure was inappropriate and the current Wilson School administration wouldn’t spend money that way.

The email is part of the evidence in a lawsuit filed in July 2002 by the Robertsons against the university. Though the lawsuit originally was sparked by a dispute over who should manage the Robertson gift money, it has produced a trove of documents raising broader questions about Princeton’s fidelity to its donors’ intentions in this and other cases.

“We have been mugged, and we want justice,” says William Robertson, the 56-year-old son of the original donors, the late Charles and Marie Robertson. Princeton officials “were hoping the family would lose interest,” says William. “They miscalculated.”

The suit by William Robertson, his two sisters and one other relative seeks to let the Robertsons use the gift money independently of Princeton and demands that the university reimburse all allegedly diverted funds and pay damages.

Princeton says it has been faithful to the Robertsons’ intent and honest with the family over the years, calling the failure to disclose the graduate-student funding a rare misstep. Although some spending may not have gone directly to train future U.S. government officials, Princeton argues that it supported the Robertson public-service mission. In any case, the university says, the family ceded control by allowing Princeton to appoint a majority of trustees of the foundation created to oversee the gift.

Robertson v. Princeton may be the most important case higher education has faced over the question of honoring the wishes of a donor. Should the Ivy League school lose, it would be an expensive blow. Swelled over time by investment gains, the Robertson fund now totals $650 million, or 6% of Princeton’s $11 billion endowment. Princeton now ranks No. 1, tied with Harvard University, as the top American university in U.S. News & World Report’s rankings. Its endowment is the highest per student of any major university in the country.

U.S. colleges are receiving more donations than ever, about $24 billion a year. An increasing share comes from large donors, who often attach strings to their gifts that universities may come to regret. In 1995, Yale University returned a $20 million gift from Texas billionaire Lee Bass after the school was criticized for not implementing a curriculum on Western civilization that the gift specified.

Charles and Marie Robertson’s children have spent more than $10 million pursuing their suit. It has produced 170,000 pages of documents from Princeton and involved more than 120 days of depositions, including testimony from four Princeton presidents. Princeton has spent $12 million defending itself. A trial is expected this year at Mercer County Superior Court in Trenton, N.J.

In the Robertsons’ latest filings, a former Harvard finance official whom the plaintiffs hired as an expert witness said Princeton spent $207 million from the Robertson gift outside the mission authorized by the donors. Princeton rejects the number, saying that aside from a relatively small number of cases over decades its spending was proper.

The case also has produced documents questioning the use of $1 million given by the foundation of former Sen. John Danforth’s family. A 2003 review by a Princeton employee found that the money, intended to promote religious life on campus, was diverted elsewhere. Princeton says the employee was wrong and the money was used properly.

Over four decades, the court record shows Princeton presidents and deans often chafed at the conditions of the Robertson gift. In a confidential 1972 memo to Princeton’s president, the then-dean of the Wilson School expressed impatience with the Robertsons’ insistence on preparing students for federal service with a focus on international affairs.

“What bothers me” about the terms of the gift, wrote the dean, John Lewis, is “the unspoken premise that, with respect to any American institution dealing in public affairs, the highest per-se loyalty automatically must be to the U.S. government….The university should resist a blind commitment to nation-state parochialism.” Today, Mr. Lewis says he still feels the same way.

Eight years later, in another confidential memo, then-President William G. Bowen said Robertson money should be used “to undertake appointments and responsibilities that will benefit other parts of the university as well as” the Wilson School. In an interview, Mr. Bowen, now president of the Andrew W. Mellon Foundation, defends the memo, saying that “the school is not an island. It’s part of the university.”

Special Resonance

The Robertson dispute has special resonance for Princeton. It adopted the motto, “In the nation’s service,” after the title of a speech in 1896 by Woodrow Wilson, then a professor and later Princeton’s president before becoming U.S. president.

Charles Robertson was a 1926 Princeton graduate and Naval intelligence officer in World War II. His wife Marie brought her A&P inheritance to the marriage.

A former Princeton president, Robert Goheen, now 86, recalls soliciting the gift through “various private talks” and golf with Mr. Robertson. In a letter to his son William, Charles Robertson wrote that John F. Kennedy’s words—”Ask what you can do for your country”—inspired the gift, which the Robertsons made anonymously in A&P stock. In 1973, after Marie Robertson’s death, the family agreed to be identified in part because of suspicion on campus that the money had come from the Central Intelligence Agency.

To manage the gift, Princeton and the Robertson family set up a foundation with a seven-member board, four chosen by the school and three chosen by the family. The foundation’s “objective,” its certificate of incorporation says, “is to strengthen the Government of the United States…by improving the facilities for the training and education of men and women for government service.” The annual income from the gift would support a graduate program at Princeton “where men and women dedicated to public service may prepare themselves for careers in government service,” with “particular emphasis” on international relations.

Princeton says that from 1973 through 2005, 229, or 12%, of the 1,923 graduates of the Wilson School’s graduate school took their first job with the federal government in international affairs, and another 184, or 10%, worked for the U.S. government in other capacities. The rest mainly went into law, academia, consulting, state and local governments and nongovernmental organizations, Princeton says. These numbers are typical for top-tier graduate programs with international-relations tracks, according to Daniel J. Whelan, executive director of the Association of Professional Schools of International Affairs.

In its court arguments, Princeton has called the goal laid out in the founding document “aspirational.” The school says it can’t guarantee that Wilson School graduates will get government jobs. Spending for a broader “public service” mission, including research, is in tune with the original goal, it says. As evidence, Princeton notes that the certificate says the foundation can provide “auxiliary services, plans and programs” to further the purpose of the Robertson gift.

Almost from the start, Charles Robertson, who sat on the foundation board, clashed with Princeton officials because he thought too many students from the graduate program were ending up outside government. Princeton blamed student disenchantment with government during the Vietnam War.

“I shared Charlie’s distress,” former President Bowen says now. “The world had changed. Nobody can understand the Robertson Foundation saga without seeing a flag called Vietnam waving in the background.” He thought that very problem meant Princeton had to broaden the Wilson School’s activities, in order to keep attracting top students.

Mr. Robertson didn’t buy it. “Federal government service with international relations and affairs,” Mr. Robertson wrote to Mr. Bowen in November 1972. “That was our original goal. It continues to be our goal, and it emphatically always will be our goal!”

Douglas S. Eakeley, Princeton’s lawyer in the lawsuit, says Mr. Robertson, who died in 1981, later grew more supportive of the school’s direction. The lawyer cites a 1976 letter to President Bowen in which Mr. Robertson said “the School has never been in stronger hands.”

Still, the issue failed to go away. In 1993, former Federal Reserve Chairman Paul Volcker, then a professor at Princeton, wrote a broadside to the university administration suggesting that the Wilson School was straying from Charles Robertson’s intent. Its curriculum, Mr. Volcker said, was “diffuse” and “little directed” toward government administration. The faculty was engaged “more and more in theoretical abstractions further and further removed from public policy.”

Mr. Volcker said the Robertson money was going for purposes “hard to relate to the mission” of the school. “Does it really meet what Robertson and others had in mind? Does it respond to the needs of the country in an appropriate way…? I think not.”

A Better Job

Reached recently, Mr. Volcker said the school is doing a better job under Dean Anne-Marie Slaughter, who took over two months after the Robertsons filed suit. Ms. Slaughter has introduced programs placing students in federal jobs and has appointed additional faculty specializing in international affairs.

The conflict came to a head five years ago when Princeton decided, against the wishes of the trustees representing the Robertsons, to manage the Robertson money as part of its overall endowment. The original agreement with the Robertsons specified that money wasn’t to be commingled with the general endowment. Princeton says it is upholding that agreement by placing the money in a separate account in the endowment. It says the Robertson money now is managed more professionally and at lower cost.

After the Robertsons sued in 2002, their lawyers started poring through Princeton’s finance records. They later hired Michael G. McGuire, a PricewaterhouseCoopers accountant and former finance director at Harvard Medical School. In a filing last week, Mr. McGuire analyzed spending primarily from 1996 through 2003 and in some cases since the 1960s. His report identified $207 million of “diversions” of Robertson money from the Wilson School. In some cases the total includes investment gains that the Robertson fund would have accumulated if the alleged diversion hadn’t taken place.

Princeton disputes that analysis, saying the money was mostly handled properly. It says the university sometimes even paid expenses that should have been shouldered by the foundation.

In his report, Mr. McGuire says Princeton inflated its overhead by tens of millions of dollars in part by double-charging the Robertson Foundation when the Wilson School constructed a building or bought equipment. First, Princeton charged the foundation directly for the purchase. Then, Princeton charged it for the same item’s depreciation, the expense associated with the lessening of value of items over time because of wear and tear. Princeton wasn’t incurring any actual depreciation expense because it never paid for the items—the foundation did. In effect the foundation was like a consumer who pays for a car once with cash upfront and then again on the installment plan.

Since 1965, Mr. McGuire says, Princeton improperly charged the foundation $3.8 million in depreciation on buildings including the Wilson School’s signature Robertson Hall, the towering marble-and-glass edifice designed by World Trade Center architect Minoru Yamasaki. Mr. McGuire says that amount would have grown to about $41 million today. Princeton and its expert witness, Bradley A. Massam, an Ernst & Young accountant, say “depreciation” was actually used to refer to maintenance costs for those buildings—something to which Princeton was entitled.

In a court filing, Princeton acknowledged that charging the foundation for equipment depreciation was “inappropriate.” It says it has stopped the practice. Both sides place the amount of this overcharging at about $1 million since 1965. That amount would have grown to about $16 million today, Mr. Massam says.

Mr. McGuire’s report cites several other examples of money flowing to projects that the Robertsons view as outside the donors’ intent. Along with the money for tuition at other schools that was mentioned in the April 2002 email to President Tilghman, millions of dollars flowed to such programs as the Wilson School’s Center for Research on Child Wellbeing.

Through their lawsuit, the Robertsons also discovered a February 2003 review of endowment accounts that are designated for Princeton’s Office of Religious Life. The report, submitted by Jessie Washington, then an analyst in Princeton’s development office, said there were “many problems with the management of the university’s endowed funds” that could have “serious legal implications.”

In fiscal 2003, Ms. Washington wrote, $1.2 million in income from the religious office’s endowed fund was shifted to the school’s general operating budget. “I believe my findings suggest University-wide problems in the handling of endowment funds,” she wrote.

In April 1988, for example, a donor named Lois Thompson gave $5,000 to Princeton University “in loving memory” of her brother, a 1935 alumnus, specifying that the money be used “to maintain and preserve” the pipe organ at University Chapel. On Ms. Thompson’s letter, an unidentified official had written a note to the university’s treasurer, instructing him to use the money “to relieve general funds.” Another notation in parentheses read, “Dept is not to know.” Mr. Eakeley, Princeton’s lawyer, says the transfer was reimbursing general funds that had been used to maintain the organ.

Ms. Washington also questioned the handling of a gift from the Danforth Foundation. Former Sen. Danforth, an Episcopal priest, heads the foundation, which gave $1 million to Princeton in 1959 for “religious work” on campus. By January 2002, the fund’s value had grown to $18.5 million. However, only $6,000 was allocated annually to the Office of Religious Life, Ms. Washington determined. Although $736,000 of that year’s income from the Danforth Foundation’s fund was supposed to go for scholarships in the religion department, the school “reallocated the money to general funds,” she reported.

Ms. Washington, who now works for a consulting firm, says she met with Steven Gill, now Princeton budget director, in the summer of 2002 to get an explanation. She says Mr. Gill justified the shift by saying the school paid much of the overhead of the religious-life office. When she showed him the notations on the organ gift, she recalls, “he laughed and said, ‘Don’t tell the New York Times.’ ”

Mr. Eakeley says Mr. Gill intended the remark as a joke. The lawyer says university auditors concluded that Ms. Washington’s findings were mistaken and that money was used as donors directed. Prompted by her questions, Princeton created an electronic database to monitor compliance with gift restrictions.

After being informed of Ms. Washington’s findings by The Wall Street Journal, Peter Sortino, president of the Danforth Foundation, wrote Princeton last week seeking an accounting of the funds. President Tilghman replied to Mr. Sortino that the Danforth gift has been used “over its entire history” in accord with donor conditions. She said Princeton will provide an accounting.