March 22, 2011

A five-year-old legal battle came to a quiet end as the Louisiana Supreme Court declined to hear a case challenging Tulane University’s use of a century-old donation.

By a 4-2 vote, with one justice recusing himself, the Louisiana Supreme Court rejected The Future of Newcomb College’s (TFoNC) application to hear Susan Henderson Montgomery v. Administrators of the Tulane Educational Fund. It follows a 3-2 decision in the Fourth Circuit Court of Appeals in October that sided with the university. Like the U.S. Supreme Court, the Louisiana Supreme Court is not required to give reasons why it declines to hear a case.

TFoNC was created in the wake of Tulane’s renewal plan in response to Hurricane Katrina. The organization spearheaded litigation against Tulane, which sought to reopen Newcomb College. TFoNC argued that the university diverted donations that Josephine Louise Newcomb made to the university over her lifetime.

Newcomb founded H. Sophie Newcomb Memorial College in 1886 as a memorial to her daughter. She had given Tulane more than $2.5 million by the time she died in 1901, a sum that in today’s dollars would be worth nearly $50 million. Newcomb College was the first degree-granting institution for women in the country created within an existing university. It closed in July 2006 as part of Tulane’s renewal plan. The university contended that Newcomb did not impose conditions on her gifts, only that they be used for educating young women. After the college closed, Tulane established the H. Sophie Newcomb Memorial College Institute, which sponsors programs that the college used to provide.

New York AG Issues Endowment Guidance

New York Attorney General Eric T. Schneiderman released a guide for charities on new legislation that changes the rules on how they manage, invest and spend their endowments and other funds. The booklet, A Practical Guide to the New York Prudent Management of Institutional Funds Act, is available on the Attorney General’s Charities Bureau website, and provides guidance on frequently asked questions about the new law.

The new legislation, New York’s Prudent Management of Institutional Funds Act (NYPMIFA), is based on a uniform law that has been adopted in 47 states. It is a significant development in nonprofit law, replacing earlier uniform legislation dating back to 1978.

“For the new legislation to be effective, the nonprofit sector must know and understand how it works,” Schneiderman said. “This guide addresses many of the questions organizations have posed about how the law affects endowment practices. It is an important resource for charities as they work to comply with the new requirements.”

According to Michael Clark, president and executive director of the Nonprofit Coordinating Committee of New York, “Nonprofits across the state are facing a sea change in endowment spending practices, and in some cases have more questions than answers about how best to implement this important new legislation. The nonprofit sector welcomes the Attorney General’s efforts to provide much-needed practical guidance.”

What Recession? Some Charities Are Just Fine

Some nonprofits bucked the trend of falling revenues and slashing expenses in spite of weathering the worst economic time since the Great Depression.
While some charities moved to cut staff to match expenses with lowered revenues, Compassion International raised child sponsorship rates and continued with a major infrastructure initiative to build capacity.

In a continuing look at the NPT 100, a study of the largest nonprofits in the nation that appears annually in the Nov. 1 edition, Compassion International was among the charities that saw expenses rise in Fiscal Year 2009. However, the Colorado Springs, Colo., charity stayed the course and prioritized its long-term, capacity-building plans. Overall, NPT 100 charities had expenses decline about 6 percent in the aggregate but about half of the 100 nonprofits had higher expenses than the previous year.