Dive Brief:
- Eric Suder donated between $1 million and $2 million to eight universities through his family foundation to support the first four years of a scholarship program for first-generation students called First Scholars, expecting the universities to hold up their end of the agreement and take over after the original donation ran out.
- The New York Times reports that Suder has filed a lawsuit against the University of Alabama for cancelling the program two weeks after getting the final check for $250,000 in September 2014, even though in its application for the grant, it said it would designate an endowed support fund to cover program costs once Suder Foundation funding ran out.
- While Southern Illinois University Carbondale and the University of Kentucky are fulfilling their obligations to current First Scholars on their campuses, they aren’t accepting any new ones, but the University of Memphis has happily taken over the program, which has helped 95% of participating students succeed on campus.
Dive Insight:
Suder filed the University of Alabama lawsuit last summer for breach of contract, speaking publicly about the litigation only last week. For its part, Alabama says it did not default on any of its agreements to the Suder Foundation. The case is sure to create a problem for the university’s fundraising apparatus, however, as donors lose trust in the organization. So far, the university has refused to refund the foundation’s money and The New York Times reports it has limited contact between the Suder Foundation and First Scholars on its campus.
U.S. higher education was built on philanthropy. Harvard ran its first fundraising drive in 1643. Along with the contributions of families, through tuition, and state and federal governments, philanthropic giving has turned this country’s education system into, arguably, the best in the world. That foundation is undermined, however, when donors cannot trust that the terms of their giving will be respected. And that’s a problem that could bleed throughout all of higher ed.