When Lessinger left the chair in 1996, UNF had trouble recruiting a scholar to take over. Finally, the chair became a visiting scholar program in which educators from around the country visit and give lectures about education reform. Rather than paying a salary, the chair pays a stipend to speakers and pays to publicize the lectures. "I was not entirely satisfied with this rotating thing," Schultz admits. "It was nice, it brought in some fine lecturers, but it wasn’t on the cutting edge of education." Schultz felt that the chair was not achieving what he had intended, yet he knew that under the gift agreement he had very little leverage. He could neither withdraw the gift nor make any demands on the university to fill the chair as he wished.

"Once you’ve given the money and signed the agreement, you have no recourse," says Lisa Philp of JPMorgan Private Bank in New York, who explains that donors must realize the permanent nature of a gift of this kind, particularly when the endowed chair carries the family name. One of her clients endowed a chair decades ago that was later offered to a rather controversial scholar. "Every time he was quoted in the press, he was identified by the chair he holds, and so the family name was continually linked to this provocative research," Philp says. After several attempts to contact the university and express their displeasure, family members gave up and severed ties with the school.

TOP VIEW: Donors who establish university chairs may be surprised to find that after the donation is accepted, they get little or no say in the academics hired for the newly created position. To avoid frustration over how a gift is ultimately used, experts advise donors to establish long-term philanthropic relationships with the universities they fund and, like any financial transaction, negotiate the details.

"If we had to do it again, we could go a long way toward alleviating that situation," Philp says. "We could spell out in more detail in the grant agreement what kind of researcher the donor would want."

Schultz could have found himself forced into a similar situation, but he had a number of factors in his favor. First, he had maintained a strong, long-term relationship with the school. In 2002, he funded an entire educational program and the building in which it resides. The Schultz Center for Teaching and Leadership is a master’s degree program and continuing education program for local teachers and principals. Second, Schultz has been active in education reform for 40 years. He has many contacts in this field and can serve as a resource for the university to help fill the position.

So when Schultz made a phone call earlier this year to UNF president John Delaney to discuss his concerns, Delaney listened. Then Schultz called the university’s provost and the dean of the college of education. They all agreed that the chair could be used more effectively. "They are presenting me with a plan next week. I have been working with them, so I have some sense of what they’re going to be coming up with," Shultz says. "They were very nice to ask me if I had any ideas about who should hold the chair, and they’ve been very kind in keeping me involved lately." The back story, of course, is that he is a major donor, and the school has every intention of keeping him happy.

Rock-Star Scientist
Endowing a college chair, particularly one that bears your name, begins a long-term relationship. "It’s like a marriage," says James Rogers, vice president of development at Eastern University in St. Davids, Pa. "There’s a courtship, then you ask the question. Then hopefully the relationship matures over the years." Donors should be prepared to woo as long as four years to sign an agreement in principal, prior to the actual gift agreement. The first step in this process is to understand why universities want endowed chairs and what they expect of the donors who create them.

"Universities need these positions to recruit faculty," says Tom Kinnear, executive director of the Zell Lurie Institute for Entrepreneurial Studies at the University of Michigan in Ann Arbor, who likens the top tier of faculty to rock stars. "Try and get these great teachers to your school without an endowed chair, and they won’t talk to you."

To recruit celebrity researchers, the university needs to create a plum position with a high, guaranteed salary and benefits. Sometimes this position is called a distinguished professorship or eminent scholar endowed chair. The donor makes a significant gift, usually a minimum of $2 million; at many universities, the amount is generally closer to $5 million. But even a large gift might not complete the endowment. Often a group of donors pools resources to create an endowed chair, with the largest donor buying the naming rights. The fund needs to be large enough to earn $60,000 to $100,000 annually to pay the professor’s salary while the principal grows. In some cases, the endowment will defray the cost of teaching assistants or an associate professor to cover the workload of the chair while he or she takes on research projects.

If the donor funds the endowment fully in the first year, the university may allow the investment to grow for the two to three years that it takes to find a candidate to fill the position. In other instances, the donor may spread the donation over two to three years as the search goes on, while taking the full tax break in the first year.

A donor interested in creating an endowed chair should have frank discussions about possible candidates and the type of scholar he wants or does not want before signing a gift agreement. The parameters for the type of chair holder should be clearly stipulated. If a donor wants to encourage or facilitate a type of research or an area of study that is controversial, the school may ultimately refuse the gift.

Donors should expect their motives, their wishes and even their business practices to be vetted by the school before any gift agreement is drafted.

That happened at Yale when alumnus Lee Bass, class of 1979, donated $20 million for the creation of a core curriculum in Western civilization. The gift included funds for several professorships. An internal battle delayed and finally scuttled plans to carry out Bass’ wishes. Late in the process, Bass asked that he be allowed final approval over the professors that Yale would hire for this new area of study, a stipulation that Yale could not abide. Ultimately, Yale President Richard Levin returned the funds in 1994, the largest such gift ever returned by a major university.

Lay’s Legacy
The courtship involving any large donation goes both ways. Universities avoid donations that have too many strings attached, or with a donor who is himself controversial. "Nobody wants the Bernie Evers endowed chair in business ethics," Kinnear quips. However, this is a serious concern, as officials at the University of Missouri can attest. In 1999, Missouri’s economics department gladly accepted a $1.1 million gift of Enron stock from Kenneth Lay’s family foundation when Enron was trading at $82 a share. The donation was earmarked to create the Kenneth Lay Professor of International Economics. Fortunately, the university liquidated the stock long before Enron’s epic collapse. Unfortunately, the university has been unable to fill the position, perhaps because of the publicity attached to Lay’s name in the ensuing scandal following Enron’s nasty bankruptcy in 2001. In 2002, 28 members of the Missouri faculty signed a public letter asking the university to return the funds. In another public letter, the chair of Missouri’s economics department, Michael Podgursky, tartly defended the gift. "If higher education institutions rejected philanthropic contributions from controversial American businessmen, prestigious institutions such as Stanford University, the University of Chicago, Carnegie-Mellon, Vanderbilt and Duke University, to name just a few, would not exist," he wrote. To date, the chair remains vacant. In the wake of Lay’s indictment in 2004 for bank fraud, securities fraud and lying about the same, recruitment efforts stalled.

These are headaches no university wants. Donors should expect their motives, their wishes and even their business practices to be vetted by the school before any gift agreement is drafted. The conversations around creating an endowed chair take as long as four years, and includes discussions about the type of scholar who might be chosen, the criteria for choosing and the name of the chair itself. Many donors do not wish to be identified as the donor of a chair, and may name it for a colleague or a field of scholarship, such as Middle East studies or sustainable business.

Donors should stay involved with the school and the selection process for as long as possible. In many cases, this means meeting the candidates for a chair and offering opinions on them. Because an endowment of any sort is a charitable gift, the university is not obligated to take the donor’s advice about whom to choose. Of course, many times schools are concerned about how donors feel about the chair holders. They will arrange introductions and facilitate a relationship between the donor and potential chair holders.

When this relationship works out, it can be beneficial for both donor and chair. Michigan’s Kinnear holds a chair donated by Keith Alessi, former CEO of the Jackson Hewitt tax preparation service. Kinnear values the relationship he and Alessi have developed since he took the position. "I have a lot of respect for him," he says, "and we have great discussions."

Michelle Seaton is a senior correspondent for Worth.

Illustration by Brad Yeo.