Uchicgo fact check ! [Thread!] This info is true, but misleading. Permanent or “true” endowments made by donors may only be used for their designated purpose set forth by the donor (aka if the donor said the money was for the library it could onle be for that)

Additionally these donations need to exist in perpetuity, so the university has to save some and invest some.

However, there are two ways to lift an endowment spending restriction. If the donor is alive and well they themselves can change the donor-imposed restriction on the use of a charitable gift.

Second, if the donor is deceased or cannot be located a legal proceeding called a cy pres can be brought to court to appeal for the spending restriction to be released (this is important later).

Additionally, every university has something called a quasi endowment or a “board designated endowment” which functions like an permanent endowment (money thats usually invested by the Uni) excerpt there is no restriction to hold the fund permanently or how the funds are used.

So. Given this information, how does this interact with the universities argument? Essentially, there ARE legal restrictions on how the university spends its money however that does NOT mean it is impossible to have these restrictions changed.

So what could the university do? First, in for permanent endowments there are two cases: the donor is alive or the donor is dead.

If the donor is ALIVE they can be solicited to change the intent of their donation (which seems feasible since it’s good PR to help those in need during a pandemic) this is particularly permanent for the capital campaign that just occurred.

If the donor is DEAD there there is the aforementioned cy pres proceeding that the university can undertake. An important thing to note about these proceedings is they must have grounds of the donations original intent is impractical or the donations intent is considered wasteful

This would be a more challenging undertaking by the university, although not impossible.

Also! It’s important to note that not all donations have stipulations on spending! “Funds functioning as endowment” are donations that may be used at the universities discretion.

Finally, there is the board endowment which could also be directed to help fund this effort. All in all, the letter sent by the university rings disingenuous in a time where low income students are struggling.

Sources! https://finance.columbia.edu/frequently-asked-questions/358

https://www.nycommunitytrust.org/newsroom/professional-notes/changing-donor-imposed-restrictions-cy-pres-and-equitable-deviation/

https://finserv.uchicago.edu/accounting/endowments-gifts/endowments.shtml