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A private foundation provided a very large portion of the money used to construct a new facility for a private school. Upon completion of the facility, the foundation was not pleased with the management of the school.  It demanded that all of the existing board resign and a new board was implanted to run the facility. No written agreements were in place when the donor provided the construction funds. Has a crime or legal violation been committed?

It was obviously heavy-handed and overreaching, but I don’t see any law that has been broken.  The foundation could have conditioned the grant upon a change in leadership, and the board could have decided whether or not to accept the gift.  Without such conditions, the board did not have to resign, even if pressured to do so after the construction.  If the school was dependent upon the foundation for its continued success, it might have been a good decision under the circumstances.  But it is not a good idea to let a charity get into the situation where a single donor can have so much influence.

10/20/2009

Article Archives >> To the Point