Princeton University will keep control of most of an estimated $600 million fund as it settles a lawsuit by descendants of the money's original donor, who said the school strayed from their relatives' original intent for the gift.
Both sides claimed at least partial victory in the settlement, announced Tuesday, which ends a six-year legal battle and will cost the university nearly $100 million. It still needs approval from a judge.
Princeton maintained it would be a dangerous precedent to let a donor's heirs change how an ancestor's intent was interpreted, and his donation was spent, decades after the fact.
A&P grocery heirs Charles and Marie Robertson gave the school $35 million in 1961 in a gift their heirs maintain was intended to educate graduate students for careers in government. The plaintiffs said the fund is now valued at $600 million but the university could not confirm that.
In their lawsuit, the heirs complained that the school's Woodrow Wilson School of Public and International Affairs, supported by the grant, had violated the donors' intent. The school trains students for careers in government but also a broader range of policy-related careers.
$50 million for new foundation
As part of the deal, the school will pay $40 million in legal fees. It will also donate $50 million from the disputed funds, beginning in 2012, to start a new foundation that will hew closer to the Robertson family's goals. But the university will be free to use the rest of the money in the endowment to support Wilson School programs as it sees fit.
In a letter to the Princeton community, President Shirley Tilghman said Princeton had achieved its key goal of controlling the use of the funds at the Wilson School, but had settled to avoid spending perhaps an additional $20 million in legal fees if the case went to trial. She said each side had already spent more than $40 million in legal fees.
"It is tragic that this lawsuit required the expenditure of tens of millions of dollars in legal fees that could have and should have been spent on educational and charitable purposes," she wrote.
Donors' son: Deal sends message
William Robertson, the donors' son and lead plaintiff in the suit, said in a statement the settlement was "more than a slap on the wrist. This is a message to nonprofit organizations of all kinds and throughout our country that donors expect them to abide by the terms of the designated gifts or suffer the consequences."
The funds had been held by the Robertson Foundation, an entity within the school's vast investment endowment. The Robertson statement said the foundation funds were currently valued at about $600 million. A Princeton spokeswoman said the most recent figure the university would provide was last June 30, when it was around $900 million, but confirmed it has declined since then.
Under the settlement, that Robertson Foundation will dissolve and its assets will be transferred to Princeton, which will use them to fund the foundation's goals, but — critically — "as understood and interpreted solely by Princeton."