These days it does not seem like much time goes by without another revealing story about higher education making the news. The latest is a report on the lawsuit on Nasar v. Columbia. This concerns Sylvia Nasar, the John S. and James L. Knight professor of business journalism at the Columbia University Graduate School of Journalism and her lawsuit against Columbia University. Nasar accuses Columbia of diverting the funds from her endowed chair to purposes other than those intended by the donors. An audit by KMPG claims that “it appears that the Graduate School of Journalism did not abide by the original terms and spirit of the grant agreement.” Columbia argues that "Nasar’s suit is without merit and that even if all her allegations were true, the university could not be found to be in violation of the law." The reporter, Peter Berkowitz, concludes "if all of Nasar’s allegations are true and the courts of New York are unable to grant relief, it would mean that New York state law permits university administrations to disregard their written agreements with impunity and behave deceitfully when called to account." (Another account here.)
Sylvia Nasar has issued a statement on the lawsuit where she argues that "a great university must be able to assure
donors that it will honor its promises." It is hard to argue with the sentiment or the logic.
In response, Columbia has gotten the donor to change the terms of the agreement so that it can still spend the money how it wants to rather than how the donor originally specified. I suspect that Columbia will do everything it can to settle this out of court as it would be bad news for university administrators if they actually had to spend endowment money the way they were supposed to.