This is an online resource for ethical questions and answers as they relate to fundraising and planned giving. The NCGPC posts real questions from real people and Doug White answers them. All identities, both of people and places, are kept confidential.
A Bribe or a Gift
Submitted October 1, 2019
At my university we're more than a little concerned about what's come to be known as the "Varsity Blues scandal," where some of our peer institutions have been accused of a criminal conspiracy to influence undergraduate admissions decisions. We've all looked carefully into the case and now wonder what constitutes a gift — an actual gift — and what constitutes a bribe. Is there any way these days to be sure?
The Varsity Blues scandal involves 34 parents who were charged last March with paying money to get their children into college and to receive help to improve scores on college admissions exams. Fifteen of those parents have pleaded guilty to fraud. One of them, actress Felicity Huffman, apologized and admitted to paying $15,000 to have her daughter's SAT exam score artificially inflated. She has been sentenced to two weeks in prison and is to report in later this month. Unlike Huffman, another actress, Lori Loughlin, and her husband, the designer Mossimo Giannulli — who parted with $500,000 — are planning to fight it out in court. They plan to argue that the money they paid to get their daughter into the University of Southern California wasn't a nefarious bribe, but that it was instead an act of altruism.
Loughlin's attorney, William Trach of Latham & Watkins, contends that the money the government calls a bribe was really a charitable donation. "Checks were made out to USC Athletics and to a fund at USC," he says. "Those checks were cashed by USC." Trach's logic, apparently: the money was sent to a charity and the charity put the money into its bank account; therefore, it was a charitable contribution.
There's more to the Varsity Blues scandal — much more — but your question centers on something that might not be able to be proven in a court of law, but which is central to ethical decision-making. It also involves a slippery-slope consideration, as many parents support the colleges their children apply to, even before the application is submitted.
I acknowledge that a pure heart isn't the only thing driving many charitable contributions. Buildings and programs, for example, are often named for donors, a public recognition of their generosity. And there's no issue with that — not with the IRS and not with the public. But where do we draw the line between a public accolade and a more tangible quid pro quo — a favor or advantage granted or expected in return for something? If Loughlin's defense goes down the road of altruism, it will have to jump over the hurdle of both the timing of the payment — at this point it's difficult to call it a gift — and the quo relative to the quid.
As of now, it appears that in the gift vs. bribe argument, evidence for the bribe is stronger. Further, for broader reasons than bringing a group of parents trying to game the system to justice, it's important to know the difference. Philanthropy has entered an era of unprecedented scrutiny of motive, while at the same time nonprofits are asked to show their impact. Our sector must be vigilant; we cannot afford to let charlatans, without charitable motive, to falsely define the narrative of what doing good means.
This may not be the ultimate or best answer, but this comes to mind: Your university might establish a policy not to accept any gifts from prospective parents, even from those who already have children attending. If the prospective student's parent is an already generous alumnus or alumna of the school, then make it clear that no further gifts will be accepted once an application has been received.
If you have a question, please feel free to contact Doug White at firstname.lastname@example.org. While all issues discussed are real, identities are kept confidential.
Doug White, a long-time leader in the nation's philanthropic community, is an author, teacher, and an advisor to nonprofit organizations and philanthropists. He is the former director of the Master of Science in Fundraising Management program at Columbia University, where he also taught board governance, ethics and fundraising.
He is the author of four books on philanthropy. His most recent, "Abusing Donor Intent," chronicles the historic lawsuit brought against Princeton University by the children of Charles and Marie Robertson, the couple who donated $35 million in 1961 to endow the graduate program at the Woodrow Wilson School. The family contended that Princeton abused its mandate to spend the money as the donors wished — and as the university agreed to. His fifth book, which is about the crisis that developed at Wounded Warrior Project, the nation's largest Veterans Service Organization, is scheduled for publication in 2019.
Since 1979 Doug has advised hundreds of charities of all types and sizes. Today, he works closely with select organizations on ethical decision-making, board governance, and fundraising, as well as with individual philanthropists who want to see their gifts used most effectively.
In 1995 Doug testified before a Congressional committee in support of the Philanthropy Protection Act and served as an expert witness for the charitable defendants in a national lawsuit — the "Texas Lawsuit" — that threatened the ability of charities to raise money, primarily through gift annuities.
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