U. of Alabama’s Returned Gift Is a Case Study in Donor Relations Gone Bad

Blake Paterson, AP Images

Last September, Hugh F. Culverhouse Jr. hugged Mark E. Brandon, dean of the University of Alabama’s law school, and shook hands with the Tuscaloosa campus’s president, Stuart R. Bell, as they unveiled a portrait of the 70-year-old philanthropist.

Culverhouse had just pledged $26.5 million to the university, the largest gift in its 187-year history. In remarks that day, he spoke of a hope that law students in Tuscaloosa would be provided with the best teachers, the best facilities, and competitive scholarship funds. The school was renamed in his honor.

By May of this year, though, the relationship between the university and its top donor had turned sour. Culverhouse wanted a role in the law school’s decisions about the use of his money, while university administrators increasingly felt he was overstepping his bounds.

Last Friday the Florida real-estate investor’s conflict with the law school reached a boiling point when the university system’s Board of Trustees voted to return the $21.5 million of Culverhouse’s gift it had received so far and to remove his name from the law school.

Meanwhile, both in interviews and in an op-ed published in The Washington Post this past weekend, Culverhouse repeatedly asserted that the university had given back the money only after he spoke out against Alabama’s new, restrictive abortion law.

In response Alabama released a statement as well as emails strongly suggesting that Culverhouse had been falsely portraying the conflict between him and the university. The emails, dated from May 17 to June 3, appear to show Culverhouse’s efforts to wield what administrators believed to be unwarranted influence in the hiring process for an endowed chair.

In the emails Culverhouse also demeaned Brandon, calling him “insecure.” And he told Bell that the president was “unprepared” to deal with a monetary gift as large as his.

The documents also show that on May 25 the university system’s chancellor, Finis St. John IV, in an email to the system’s general counsel and two board members, agreed that the money should be returned. That was four days before Culverhouse published a statement criticizing the abortion law.

The saga is a case study in how donor relations can go bad, complete with a crescendo of national publicity and a frenzied public-relations effort to set the record straight.

In an interview with The Chronicle on Monday, Culverhouse stuck to his original claims, insisting that, although there was contention with Brandon, all major disputes had been resolved. He also asserted, without offering verifiable evidence, that the May 25 email exchange had been fabricated by university officials in an attempt to retroactively justify their narrative.

A university spokeswoman denied Culverhouse’s accusation and said that all materials provided by the university are authentic.

The falling out in Alabama is a worst-case example — though hardly the first of its kind — involving universities and big-money donors. Doug White, a philanthropic adviser and author, said it highlighted the need for mutual expectations to be made clear for each party’s role in the relationship after a donation is made or pledged.

That misunderstanding was clear in an email exchange between Culverhouse and Bell on May 25 in which the donor wrote: “You seem to think the quid pro quo is I give you the largest sum and commitment in the school’s history and you have no return consideration as your end of the transaction.”

“In my mind, it goes back to a fairly basic concept,” White said. “And that is: A gift agreement should carry a lot of these understandings down on paper.”

What Stewardship Means

White, who is the author of a 2014 book on the breakdown of relations between Princeton University and a longtime donor family, said the lesson from Alabama is twofold: Make future expectations clear, and stay in touch with the donor to anticipate possible conflicts. Disagreements between donors and universities aren’t uncommon, he said, but “you don’t try to eliminate the tension; you just try to figure out how to best manage it.”

The tension between Alabama and Culverhouse had grown to the point that Brandon, in a May 17 email to Bell and another administrator, wrote that the donor did not understand the “mission and fiscal logic of a university, the environment in which the law school operates, the nature of decision making in a public academic institution, and [the] relationship between the school of law and the university.”

That the conflict escalated so quickly — and so publicly — emphasizes the need for university officials to address misunderstandings with donors before the disputes appear in national news outlets.

According to White, what pushed Culverhouse to turn hostile and to presumptuously assert his role in the law school’s administration — and what drives many wealthy donors who fall out with their beneficiaries — was a perceived lack of respect. White said that even if such a perception is a projection or is based in misunderstanding, it is university administrators’ responsibility to cater to the donor’s ego and smooth out the conflict.

“That moment when the gift is made is really the beginning of a huge new phase, and oftentimes a lifetime phase,” White said. “And I know he’s a past donor … but you can’t let your guard down. This is what stewardship means.”

White just might be onto something. Despite all the public accusations over the past week, Culverhouse indicated to The Chronicle that he was willing to return to the table with the university if its officials would just “sit down, calm down, and put it all back together.”

Culverhouse’s name has been removed from the law school’s sign, his portrait taken down. But at the end of the day, White said, those who suffer most from the lost funds are students. Universities, he added, should do everything in their power to make sure that doesn’t happen.

“The university tends to be very happy when a gift like this is made,” he said, “and so the tougher questions are not addressed. But at some point, real life invades the process. You finish having the champagne and drinking a toast to the future, and real-life questions really come in.”

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