Donors’ wishes must be heard

By Geoffrey Alderman, June 6, 2008

Was the Hebrew University right to deduct 20 per cent of a recent legacy to fund the office of its British Friends?

Last week, the University of Oxford launched a campaign to raise £1.25 billion from private donations. Oxford is one of the world’s most prestigious academies of higher education. According to the Times Higher Education rankings — which are based on peer review (that is, the expert opinions of the world’s scholastic community) — Oxford is, together with Yale and Cambridge, second only to Harvard, and, frankly, at that level of excellence there is not much to tell them apart.

To keep this position, Oxford needs money, and since very little of this is provided by the taxpayer, private benefactions must be sought. This is a fact of life to which all vice-chancellors of UK universities will have to become accustomed. But it is very well understood in the USA, and in Israel. It should be a cause of much pride to world Jewry that Israeli universities figure prominently in the THE’s top-400 list. Whilst not one Arab university appears in this league-table, no less than four of Israel’s eight institutions of higher education do so: Ben-Gurion; the Haifa Technion; Tel-Aviv; and, in 128th position, the Hebrew University.

The international eminence of the HU is a matter of common knowledge. It is not only Israel’s highest-ranked university. It is Israel’s oldest. Its foundation stone was laid in 1918 and its first board of governors included Chaim Weizmann, Sigmund Freud and Albert Einstein. It can boast cutting-edge scholars in virtually all of the subjects it teaches, and a clutch of Nobel laureates among its alumni.

The HU’s success costs money. The American Friends of the HU was founded in 1925, and the British Friends a year later. The primary purpose of these networks is to raise the cash necessary to maintain the university’s infrastructure and fund its teaching and research. Raising this wealth, year after year, is hard work. Wealthy individuals and trustees of philanthropic foundations must be persuaded to part with large sums of money. Individuals may not wish to do so whilst they are alive. But they might be persuaded to write legacies into their wills, the capital being invested and the interest used to fund either the general expenses of the HU or specific projects.

Either way, they have a right to be assured that the gifts they leave will be applied to the purposes they identify. Indeed, they may demand this assurance as a condition of their consenting to make the gifts in the first place.

If such assurances were given or even implied, does the Hebrew University, or its British Friends, have the right to vary them?

Shorn of all the financial gobbledygook beloved of chartered accountants, this question is at the heart of the dispute in which the British Friends of the HU now finds itself.

Some years ago Geoffrey Simmonds, then a trustee of the British Friends, persuaded a non-Jewish lady to leave in her will a gift to the HU of around £5 million, all of which was intended to be applied to medical research. A bargain was made, and according to Simmonds those were its terms. The lady is no longer alive. Only Mr Simmonds, her executor, can speak for her.

To his dismay, he discovered that the trustees proposed to top-slice one-fifth of this endowment, apparently to help fund the expenses of running the London office. The precise terms of this proposed “tax” have since been changed, but the bottom line is that the trustees seem determined to — and they are convinced they can — apply some monies from such endowments to cover these office overheads, which I understand were previously covered by other fundraising activities. Mr Simmonds is equally determined to uphold the principle that endowments should be used wholly for the purposes specified by donors.

Universities (I write as a former member of the audit committee of a large UK university) are fully entitled to deduct, from endowments, sums to cover their own overheads. Indeed, according to the British Friends, the management charges have been fully disclosed to the Charity Commission, which has raised no queries. But the quarrel between Mr Simmonds and the BFHU is not about this at all. It is, rather, about keeping faith with those who give of their own wealth to support the HU and its activities.

Although I hesitate to take sides in this dispute, I have an instinctive sympathy with Mr Simmonds’s view, not least because I have in my time solicited university donations from well-disposed philanthropists. I would have been covered with embarrassment had it emerged that such funds had not been used exclusively for the purposes that the benefactors intended, without knowing that some would be used for “management charges”.

Last updated: 5:21pm, June 5 2008