Dan Weil
08/01/06
The close relationship between supporting organizations and their chosen charities can raise serious concerns about what recourse a donor has if his supported nonprofit does not honor his wishes. In 2002, the $650 million Robertson Foundation filed a lawsuit, which is still pending, against Princeton University’s Woodrow Wilson School of Public and International Affairs. The children of Charles and Marie Robertson, who started the foundation in 1961 as a supporting organization for Princeton, claim the university is not using the money in accordance with their parents’ wish to help graduate students enter diplomatic careers.
Experts suggest that one way to avoid this type of dispute is to form a supporting organization with a plan to limit its lifespan or to structure the organization to be more selective. A Type III supporting organization (see "Supporting Cast") that sustains multiple charities can stop giving money to any of them, so long as it continues giving money to at least one. (Technically, a Type III organization can support an unlimited number of charities, although most support no more than a handful. The Senate reform package would limit the number to five.) As with any supporting organization, the board must vote to sever the relationship. But the catch is that at least part of the supporting organization’s board must be comprised of individuals from the supported charity.
In practice, however, donors hold a great deal of influence over their boards. Donors frequently dilute the power of their chosen charities by supporting several organizations and giving each just one board seat. When a controversial vote arises, few charities will vote against their benefactors. "Boards of supporting organizations will recognize whose money created the supporting organization," says Janne Gallagher, general counsel of the Council on Foundations in Washington, D.C.
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