Colleges tied by strings donors attached to gifts

When Stanley Seeger gave Princeton $2 million for Hellenic studies nearly three decades ago, the gift's income paid for two courses in Modern Greek and trips to Greece for five.

But the Seeger money, which must be spent only on matters Greek, is now worth $33 million. So the university offers Greek, Greek and more Greek, 13 courses this semester, including "The Image of Greece in European Cinema" and "Problems in Greek History: Greek Democracy," as well as trips to Greece and nearby areas for more than 90 students and faculty members last year. The history department recently hired its second Byzantine specialist. And the fund paid half the cost of a collection of 800 rare coins from medieval Greece.

"Institutions do get shaped by the interests of donors," said Robert Durkee, vice president and secretary of Princeton.

As the nation's wealthiest colleges and universities report on their finances to Congress, seeking to head off federal requirements that they spend at least 5 percent of their growing endowment assets, new attention is being paid to how endowments are structured, and on the restrictions imposed by donors.

Aides to the Senate Finance Committee, which sent a query in January about endowment practices to the 136 wealthiest colleges and universities, said they received 131 responses. The responses, some of which universities have made public, show that at some, including Harvard and the University of Texas, 80 percent or more of the endowment is constrained by donors' wishes. But the responses do not begin to detail the variety of these restrictions.

Recent interviews with college officials show that while many restrictions are for broad uses, such as faculty chairs and student aid, others are less central to the functioning of a modern university. Some are quirky.

"Endowment funds are in some ways like a museum," said Mark Yudof, chancellor of the University of Texas System who was recently tapped to take over the California system. "Sometimes they are visionary. Sometimes they aren't. Land titles was a big business in another era; now, professors and students are not that interested in the subject."

Critics of universities said that while sizable portions of university endowments may be restricted, the wealthiest universities could use more of their endowments to reduce tuition. "It is simply false to claim that donor restrictions prevent increased spending," said Lynne Munson, an adjunct research fellow at the Center for College Affordability and Productivity. "Almost half of endowment funds at private institutions are unrestricted, as are nearly a quarter of endowment dollars at wealthy public institutions."

Restrictions on endowments can create tensions between donors and universities. Princeton, for example, faces trial in a case brought by the heirs of a supermarket fortune over whether a gift to help pay for programs at its Woodrow Wilson School was used as intended.

Yudof recalled that when he was dean of the law school at the University of Texas, Austin, from 1984 to 1994, "I had more oil and gas professorships than I had oil and gas law faculty."

He said he asked one donor for permission to use the money temporarily for a professor in another field, while he searched for an oil and gas faculty member. The donor said yes. "Sometimes they consent," he said. "Sometimes they don't. Usually you don't go to court."

Going to court is an option if a university finds it can no longer comply with the terms of a gift. The Virginia Tech Foundation took this step when it could not grant a scholarship for students from Warwick County, because the county no longer existed.

Gifts can become unworkable. Consider the Dudley professorship of railroad engineering at Yale. The chair was created in 1923 with a $152,679 gift from Plimmon Dudley, an engineer who worked for the New York Central Rail. His desire was that his research into railway safety be continued, "in particular the work in connection with the development and improvement of designs of rails, roadbeds and crossties."

But over the years, railway engineering lost its luster as an academic topic, and the professorship sat vacant for more than 70 years.

"I was kind of stumped as to what to do with this chair," Yale President Richard Levin said. Then Yale realized the steam engines and wood ties of yesterday had been replaced by today's magnetic levitation and superconductivity.

So since 2002, A. Stephen Morse, an engineer who has studied urban transportation and switching strategies for the control of uninhabited vehicles, has been the Dudley professor of engineering at Yale.

It is not just professorships that look different as decades go by.

Edwin Webster Sanborn, a Dartmouth graduate, gave the college money to build Sanborn House for the English department. As a condition of the gift, the department was to serve tea daily to its faculty and students at a nominal charge.

Tea is served in Sanborn daily at 4 p.m., for 10 cents a cup, open to anyone. Sophia Yuan, a sophomore who hands out the tea as part of work-study, said the practice is charming but draws few takers.

College officials said they try to be receptive to donor wishes, even when they seem strange. That happened at Wellesley College, when Leonie Faroll, a 1949 graduate, asked the college to use her gifts for the college's power plant. When she died in 2003, those gifts totaled $860,000.

"It was about giving for something that makes the place run," said Lynn Miles, acting vice president for resources at Wellesley. "Once a year she would come to campus, and we would sit and have lemonade and Pepperidge Farm cookies at the power plant."

Faroll later left the college more than $27 million in her will, the largest bequest the college ever received. Some could be used for the science center; the rest was for the power plant.

A story published on April 13, 2008 was corrected on April 24, 2008. In a previous version a New York Times News Service article about restrictions on college endowments misstated one idea lawmakers are considering that would require colleges to spend more of their endowments. The idea calls for spending at least 5 percent of endowment assets each year, not 5 percent of income.