Hillsdale College Sues U. of Missouri for a Dead Donor’s Money. It Gets Weirder.

A bizarre legal battle is playing out between Hillsdale College and the University of Missouri, featuring far-right economic ideology, a former governor turning against his alma mater, and a donor’s demands echoing from beyond the grave.

Hillsdale, a private college in Michigan, filed a lawsuit against the university in 2017, claiming that Hillsdale was entitled to a $5-million bequest from Sherlock Hibbs, a Missouri alumnus who died in 2002. Hibbs asked that the money be used to create six endowed professorships at the university’s Trulaske College of Business.

Last month the Missouri Supreme Court ordered the lawsuit to be moved from St. Louis County, where it had been filed, to Boone County, where the university’s flagship campus is located.

Hibbs, a Wall Street financier who graduated from Missouri in 1926, included a few unorthodox stipulations. The professors whose positions would be endowed by his gift, he wrote, must be “dedicated and articulate disciples” of the Austrian School of Economics, a radically free-market ideology that has more in common with theories of anarcho-capitalism than with mainstream free-market economics.

It’s another, second provision that makes this case so strange: Hibbs asked that Hillsdale College, with which he had no known association before writing his will, be entrusted to oversee the use of his gift. If the college found that Missouri wasn’t following his instructions, it could sue for transfer of the endowment.

Hillsdale is now taking advantage of that mechanism, arguing in court that Missouri has not administered Hibbs’s gift according to his will. To represent Hillsdale, the college has hired Jay Nixon, a former governor of Missouri and a graduate of the university.

Donor’s Demands Up for Interpretation

Doug White, a philanthropic adviser and author, told The Chronicle that it’s unusual for a donor to put such strict conditions on a gift, and even more unusual to grant another higher-education institution the power to sue for that gift in court.

White, author of a 2014 book on the breakdown of relations between Princeton University and a longtime donor family, said that while the stipulations in the Missouri agreement would certainly constitute a violation of the university’s academic freedom, that argument might not hold up in court, since the university accepted the gift on the terms laid out in Hibbs’s will.

“You really can’t micromanage the classroom from afar or from the grave, or even from across state lines,” White said. “My feeling is that Missouri may have a very strong position here, but only if they’re actually following the donor’s intentions, … and I think that’ll hinge on how broadly they define [Austrian economics].”

Missouri argues that it has done nothing to justify Hillsdale’s lawsuit. Every four years, the dean of the business school sends a letter to Hillsdale’s president reaffirming the university’s compliance with Hibbs’s conditions.

In 2018, a year after Hillsdale filed the suit, Missouri sent a letter declaring that the current occupants of professorships endowed by Hibbs’s gift — whose value has grown to $9 million since 2002 — believe in and promote “numerous principles associated with the Austrian School of Economics.”

A spokesman for Missouri, Christian Basi, said the university was confident that it had followed Hibbs’s wishes. “We pride ourselves on, when we decide to accept a gift, that we explicitly fulfill that donor’s wishes as it is laid out in the gift agreement,” he said.

Nixon, Hillsdale’s attorney, issued a statement asserting that Missouri had not fulfilled those wishes.

“In his will, Mr. Hibbs clearly and specifically described the intentions for his gift to endow six professorships. Mizzou has not fulfilled Mr. Hibbs’s intent,” Nixon wrote. “Hillsdale College looks forward to thorough discovery into why the University of Missouri changed the terms of Mr. Hibbs’s gift.”

The strict requirements laid out in the agreement, along with the odd provision that Hillsdale to monitor the donation, should probably have been a red flag for Missouri back in 2002, White said.

“I haven’t heard of anything with the kind of restrictions that say, ‘I want you to teach a certain way.’ Yale had that problem 20 years ago,” when a donor wanted to choose the faculty members for a program his gift had established, “and they gave the gift back,” he said.

Basi said that the administrators who accepted the gift in 2002 are no longer at the university, and that he couldn’t speculate on whether Missouri would agree to Hibbs’s conditions if the donation were made today. But he differentiated between the donation’s requirement that the professors “believe in” Austrian economics, and the interpretation that they must teach it in Missouri classrooms.

“The gift stipulates that the professors have to believe in it. It does not stipulate anything about teaching,” he said. “The gift in no way restricts our curriculum.”

Hillsdale’s contention is not whether Austrian School economics is being taught in Missouri classrooms, according to an amended complaint added to the lawsuit. Rather, the complaint asserts that Missouri hired professors who were not adherents of the Austrian School, and that the university had accepted the gift “under false and fraudulent circumstances because the university never intended to comply” with Hibbs’s conditions.

In the complaint, Hillsdale claimed that two Missouri administrators in 2003 expressed “concerns” with the stipulations of the agreement, and that those concerns led the business school to fill some of the endowed chairs with professors who weren’t sufficiently devoted to the Austrian School.

“If MU objected to the conditions of the bequest, ... the university could have and should have declined the bequest,” the complaint says. “Declining a bequest is not unusual and, in fact, is the appropriate and ethical thing when a donee does not want to comply with the conditions of a bequest.”

Neither Nixon nor the college responded to requests for an explanation of why Hillsdale filed the lawsuit only two years ago.

Bastion of Libertarianism

Hillsdale’s role in all this may seem confusing until you visit the website of its economics department. It boasts that “what makes Hillsdale College unique among undergraduate institutions is its … attention to Public Choice Economics and the Austrian School of Economics.”

The department houses the personal library of Ludwig von Mises, arguably the movement’s most prominent and influential figure. And Hillsdale’s president, Larry P. Arnn, is a founder and former president of the Claremont Institute, a conservative think tank.

Ralph Wilson, a founder of the Corporate Genome Project, maps the influence of corporate donors on colleges’ and other institutions’ political leanings. He told The Chronicle that while Hibbs’s donation agreement is unusual, it fits into a strategy begun in the 1970s by conservative donors to influence higher education. This strategy, also used by the Koch brothers’ network of libertarian philanthropic organizations, has been described in Jane Mayer’s 2016 book, Dark Money.

“Funding these academic programs, the idea is to legitimize them and give them a reputation that seems unassailable,” Wilson said. “Students trust their professors if they don’t know otherwise.”

According to Wilson, Hillsdale has “carried the torch” for Austrian School Economics for decades. “If a donor wanted to have no question that an economics department would enforce an Austrian stipulation, Hillsdale is probably their best choice,” he said.

So why didn’t Hibbs just give the $5 million to Hillsdale? A petition submitted with the lawsuit described Hibbs’s intentions, which are aligned with the larger conservative donor movement to promote Austrian School economics.

“Mr. Hibbs offered these funds under these conditions to incentivize the growth of adherents of Austrian Economics in academia,” said the lawsuit, which Hillsdale provided to The Chronicle. “By providing Chairs and Distinguished Professorships, current adherents of Austrian Economics would create a critical mass of researchers at MU, and could teach and mentor others who would eventually take faculty positions at other universities.”

Like many donors who seek to promote a particular ideology through philanthropy, Wilson said, Hibbs probably preferred Missouri not only because it was his alma mater, but also because as a state institution it has more influence on state and local economic policy through its graduates and research.

“These donors, their fiscal realities largely exist on the state level, which is why they’re trying to influence policy on the state level,” Wilson said.

Hibbs doesn’t appear to have had explicit ties to a network of donors and organizations. But his conditions — and his identification of Hillsdale as a reliable enforcer — indicate how successful the donor strategy has been in bringing its ideas into the mainstream.

White, the author, said that he’d never seen a case like this before, and that an outcome in which Hillsdale ends up with Hibbs’s gift isn’t unthinkable.

“The idea of taking an endowment out of one school and into another is a pretty radical one. But it’s not impossible,” he said. “The onus is on Mizzou right now, in my view.”

Liam Knox is an editorial intern at The Chronicle. Follow him on Twitter @liamhknox, or email him at liam.knox@chronicle.com.