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Comment by justboxing | Hacker News Reader

> failed to fulfill several key contractual obligations

I don't understand how you can attach strings (i.e. conditions ) on gifts, telling the receipt how they can or cannot use the gift.

> In the suit, the Pearsons declared that they had lost all confidence that the University would be “an appropriate or capable steward of the Pearson Family legacy” as it had allegedly failed to fulfill several key contractual obligations that were agreed upon when the gift was made.

This would be akin to telling my dad that I will gift him a car for his birthday, but on the condition that he can never sell it or rent it out or re-gift it to his friend. If he doesn't do as I say, I'll sue him to get the gift (car) back.

Or is it that corporate gifts are not the same as personal gifts?

[EDIT: What's with the downvotes? I'm not trolling, this is a serious question.]

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> I don't understand how you can attach strings (i.e. conditions ) on gifts, telling the receipt how they can or cannot use the gift.

You do it with a contract, the same way you attach conditions on anything else in life. It's the obvious way, and it's done all the time.

There are a lot of specific rules relating to specific contract terms you can or cannot agree to, specific conditions that might make the contract invalid, implicit clauses that may apply even if not explicitly stated, etc., that's not really relevant here. But in general, yes, absolutely, if you and someone else sign a document that says you'll do X, and they have to do Y, and there's no coercion or fraud, and neither X nor Y is something illegal, then yeah, you have to do X, and they have to do Y. It's hardly hyperbole to say our society is built on this notion. And "I give you a bunch of money and you do these specific things" is hardly an exotic form!

> This would be akin to telling my dad that I will gift him a car for his birthday, but on the condition that he can never sell it or rent it out or re-gift it to his friend.

Correct. Which is a thing you could do, and which people actually do all the time, sometimes with just a verbal contract, sometimes with more formal contracts.

What's confusing or surprising about this? It's just how our society (and legal system) work. Why would you think you couldn't do it? Why would you think that people wouldn't do it?

You can enter into a contract for almost anything you'd like, if you don't like the terms you don't have to agree (and thus not get the money).

> This would be akin to telling my dad that I will gift him a car for his birthday, but on the condition that he can never sell it or rent it out or re-gift it to his friend. If he doesn't do as I say, I'll sue him to get the gift (car) back.

I think it's more like an agreement that you can use the car as long as you keep your grades up and obey a curfew.

> I don't understand how you can attach strings (i.e. conditions ) on gifts, telling the receipt how they can or cannot use the gift.

Simple, you just attach covenants to the gift. You can do the same with real property (such as during the sale of land), which restricts the ways in which a property can be used: https://en.wikipedia.org/wiki/Covenant_(law)

From the article it seems like they wanted to make sure the money was going to good use and it wasn’t.

It's hard to tell. One of the Pearsons' (the donors) complaints is that two of the faculty hired by the institute are junior faculty from lower-ranked institutions -- these institutions being Columbia and NYU. Perhaps the Pearsons wanted the institute to just poach tenured faculty from Harvard or whatever, but this hardly seems negligent on the director's part. Perhaps they know of additional evidence that explains this more.

The second complaint is that the contract stipulated a conference of some sort needed to occur at the institute by October 2018, and the resulting Catholic conference was unsatisfactory to them (it sounds like they disliked the conference's emphasis on heterosexual marriage).

It's hard to tell how reasonable these complaints are from the outside, and how much of it is donors who don't know much about universities trying to micro-manage a gift after the fact. For what it's worth the article claims the Pearsons have lost a similar donation case before.

If what is presented in the article is true and complete, it seems pretty straight forward.

Had they been more senior professors from lower ranked universities it probably would be close. But being junior AND lower ranked is kind of icing on the cake.

As for the conference, they had a specific mandate and didn't fulfill it. They knew they weren't going to fulfill it so they sent a request to the Pearsons asking if a conference that was already happening would suffice. A conference about hetero marriage which seems to have nothing to do with world peace. So seems like a blatant cop out.

My first thought was that they are just difficult, seeing as they have sued before, but it may just be that they are just vigilant as to how their money is used.

Ironically, as a faculty member, this is what did a lot of damage to the Pearsons argument in my mind.

If you're trying to build a vibrant research institution, one of the best thing you can do is to grab promising young faculty, rather than relying on senior faculty who are harder to recruit. Getting promising junior faculty, and using the institute's resources to position them for success - more hard money, better startup packages, support for staff and postdocs, etc. is absolutely a promising way to build what the Pearsons want.

And within the band of universities we're talking about, the variance between individuals is way bigger than the difference between those institutions based on rank - which is a problematic measure at the best of times.

I agree that the differences between individuals are greater than the institutions in this case.

However, it appears to me that in most academic settings, one does not move up two or three tiers (assistant/associate professorships to chaired professorships, which are the new positions in this case) at once to a peer university at the top level, unless one makes an earth-shattering contribution, say an equivalent of the first successful self-driving car.

Apparently the Pearsons want four faculty members at the chaired professor level at this institute and two of the appointees to chaired professorships, though could be brilliant, do not yet have that level of name recognition in the field.

I believe the Pearsons argument is valid in this case unless the field’s criteria for promotion is very different from science, engineering, and computer science. What do you think?

That may very well be. But it seems that the requirement is made out of a desire to increase the prestige of the new program. Presumably, tenured, high ranking professors would be better able to attract the students, and later, additional faculty that perhaps have the traits you are talking about.

According to Times Higher Education, Chicago is ranked 11th in the US and 8th in the World (different rankings...) while Columbia is ranked 2nd in the US and 14th in the World.

Rankings across every discipline will be different and vary based on the source but that's a decent estimate. The article notes one source has Chicago at #3 and Columbia at #5, with NYU at #30.

No Federal Judge is going to accept the Pearson's argument that Columbia is an obviously far inferior school. This argument would mean that the only acceptable sources of faculty would be Princeton, Harvard, Chicago and Yale (tied for 3rd with Chicago). Maybe they would accept Oxford and Cambridge as additional acceptable sources?

The overall complaint gives the sense that the Pearson's are exacting and highly litigious. Exacting on a $100MM donation is understandable, filing suit this fast is rather absurd. But both sides have lots of money for both academic research and lawyers so it will be entertaining at least.

It seems ridiculous that a gift intended to encourage studying prevention of terrorism and conflict should fund a religious conference.

I've made directed donations before. If I found out that the donation to my school was spent on football helmets instead of the scholarship fund, I'd be very upset.

You're not addressing the question, though. This was not a contract for services rendered. It was a gift.

According to the article it was a contract. The University of Chicago entered a contract with the Pearson family to host an institute. That the university reported it as a gift in the press was perhaps unfortunate, but it is understandable as it has better optics.

If the idea for the Institute had been the universities, and they were soliciting donors to fund it, and Pearson was one of multiple donors, sure that would qualify as a gift, but as the article is written, this was a very different beast.

It can still be a gift, even if strings are attached.

You can assign any terms and conditions you want on a gift. That happens outside of business and academic environments anyway, but notionally it's not any different from any other transaction.

UChicago didn't have to accept it. They chose to accept it, with the associated terms and conditions. The way the article reads, it looks like there's blame to go around, but possibly more to UChicago than Pearsons.

At what point is it no longer a gift though? What if I write a contract with Boeing where I "gift" them $X million dollars and they "gift" me a brand new jumbo jet? Do you think the IRS would be interested in the specifics of that contract?

The IRS can evaluate restricted charitable contributions to ensure that they meet a charitable purpose. If you make a restricted gift to a 501(c)(3) organization, the receiving organization should evaluate the conditions to ensure that they don't undermine the tax-exempt purposes of the organization's work. I expect that the IRS could examine the deduction on both ends to ensure that you didn't receive significant value in exchange for your gift, and that the organization is still engaged in appropriate activities.

Normally when you make a tax-deductible charitable gift, the organization you donated to will send you a letter documenting your gift and stating that no goods or services were provided in exchange for the gift:

https://www.irs.gov/charities-non-profits/charitable-organiz...

https://www.irs.gov/pub/irs-pdf/p1771.pdf

The IRS might review that documentation as part of a tax audit. If it's inaccurate, it could conceivably affect the tax status of the organization that issued the acknowledgement letter.

The IRS can also revoke the 501(c)(3) designation of an organization if it concludes that the organization is inappropriately providing benefits to its donors. For example, it might require the organization to be reclassified under a different tax-exempt status where donations are not automatically treated as tax-deductible charitable contributions.

A subtle thing that might be bothering you is that people can make extremely specific charitable gifts to pursue extremely specific goals, and those can still be treated as tax-deductible. For example, you could donate to create a scholarship with very detailed eligibility requirements (often, donors to schools have created scholarships for students with very similar life circumstances to the donors' own). But, there is still a requirement that can't claim a deduction for the amount of a donation for which you personally receive goods or services with a market value as a quid pro quo, except to the extent the donation exceeds that market value.

I'm not a lawyer or accountant and this is not tax or legal advice.

The law is not a deterministic computer program that explicitly covers all cases in the code. The law applies common sense tests of reasonableness and your scenario would obviously not pass the test.

A gift to Boeing would be a taxable event. The IRS would consider it a transaction.

When I joined the Bronx Zoo as a member, I gave them $200 and received some benefits in consideration. Those benefits are valued at $140, so I am able to deduct $60 from my income.

The law around gifts is pretty clear and well defined. Just go read the relevant laws and tax rulings instead of pedantically arguing on an internet forum.

Typically gifts, most often endowment gifts, are given to benefit a specific purpose (ie spreading fine arts). I could understand how there could potentially be obligations put forth to meet the original purpose of the endowment.

This is a first though, I didn't know you could take it back.

Or is it that corporate gifts are not the same as personal gifts?

Just 100% of this. Gift in this case has tax implications, but it in no way implies generosity of spirit, friendship, or the spirit of giving for another’s sake.

why should it have tax implication (in favour of Pearson's), if it is full of strings attached?

Why would having strings attached necessarily reduce the generosity?

If I gift you a new car, but with the caveat that after 5 years, you must donate it to charity, does that make my gift disingenous or not generous?

It certainly changes it, although I’d be far more likely to compare this case with you giving me a car with instructions telling me to pick certain people up and drop them off at certain times, or you’ll take the car back.

You have the option to take the car with those caveats or not. If you choose to accept it, I must conclude that you consider it a net positive and thus a gift. Not as good as a full, unfettered gift, but a gift nonetheless.

> I must conclude that you consider it a net positive and thus a gift

By this definition, whenever anyone buys anything it is a gift.

You should re-read my comment then.

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