Here are some remarks on the topic Neal B. Freeman delivered before the Heritage Foundation last Friday, and submitted to NRO:

When the lawsuit was settled last December, Bill and I felt like those Japanese soldiers who stumbled out of the South Pacific jungles in the early Seventies, wondering how the Second World War was going. Is it really true that the U.S. now has a Kenyan-American President?

I remind you that the Robertsons did not return from lawyers’ hell with empty hands. The headline in this case is that Princeton paid $100 million to settle the lawsuit. This was the largest donor-intent settlement in history and the most important victory for donor rights since the Buck Trust case a generation ago. This victory was achieved by Bill Robertson and his family — at considerable risk, I might add, to their reputations and their careers. At every step, we can see in hindsight, Princeton underestimated the Robertsons’ ingenuity, their intellectual force and, most importantly, their resolve. In winning this unprecedented settlement, the Robertsons reclaimed the resources to carry out their parents’ original intentions. They also provided a heartening example for donors everywhere: They upheld the lapidary principle that when a contribution is made for Purpose A, it cannot and should not be diverted to Purpose B — the principle that a donor’s rights do not expire the minute the check clears.

Bill has told you what this case meant for his family. Let me tell you what it means for your family.

You are all familiar with the first great wave of American foundations — the mega-foundations developed during the third quarter of the 20th century. Ford, Pew and MacArthur, Mellon, Kellogg, Johnson, and the rest. Those mega-foundations took in money from conservative entrepreneurs, alchemized it, and paid it out as liberal grants. Those mega-foundations became a kind of TARP program for modern liberalism — transferring enormous resources from a few productive citizens to their much more numerous political opponents. How did this happen? There are two theories of the crime. The first is that a cadre of left-wing sharpies hijacked the fruits of America’s economic miracle. The second is that conservatives were asleep at the switch and blew a once-in-a-century opportunity. I subscribe to both theories.

There followed in the fourth quarter of the century, you will happily recall, the successive booms under presidents Reagan and Clinton. Prosperity spread rapidly from the few to the many and, predictably, the rate at which new foundations were created began to accelerate. By the end of the century, new private foundations were being born at the rate of 600 or more each week. It was boom times for philanthropy. At least briefly. Until the dotcom bust, that is. When Silicon Valley went belly up in 2000, it cast a pall not only over new high-tech investment but also over follow-on philanthropy, slowing contributions not only from the high-tech sector itself, but from the related fields of financial services, computers, and telecommunications. The birth rate for new foundations slowed accordingly. Then came the Bush tax cuts. Of special interest to donors, Bush set the estate tax on a downward slope that was scheduled to reach zero by 2010. This apparent death of the estate tax removed a significant incentive and the foundation birth rate, not surprisingly, slowed further. Over the past few years, in fact, it has slowed to a trickle. Back in the real economy, however, there continued to be growth and risk-taking and the creation of new fortunes. A backlog was thus created — a pipeline full of new foundations waiting to be born, a new generation of philanthropists waiting to enter the field.

And that’s where things stood until recently — in a state of suspended philanthropic animation. And then Team Obama came to power. Politics tends to be a messy business, with much message-toning and policy-fumbling, especially in the early days of a new administration. Give Obama credit: He has achieved real clarity at the outset of his term. He is employing not the rhetoric of class warfare but the tactics of class warfare. The president has made it clear that he wants the top 5 percent to pay for the other 95 percent. He wants the estate tax to snap back to at least 45 percent next year, which will give donors, not to mention their estate planners and tax attorneys, a good case of whiplash. Obama seems determined to privatize risk and socialize profit. Even a wealth tax seems not inconceivable. In a matter of only three months, he has changed the tax environment for those of you in this room from dependably benign to overtly hostile.

Where does this leave the new generation of donors — the people who were at first chilled by the hijackings of the first wave, then stunned by the dotcom implosion, then tranquillized by the Bush tax regime — where does this leave people of means who are now alarmed by the public assault on their private wealth? It leaves them looking for help. First, as prudent people, they will look to the tax code, hunting for some barrier behind which to hide their assets. For many of them, the highest, thickest barrier to be found will be a private foundation. The great donors of the first philanthropic wave got that part right, of course. Private foundations do shelter assets from the tax authorities. What they got wrong was the assumption that their heirs and assigns would share their vision and honor their values. As we all know, it didn’t happen that way. Foundation managers went into business for themselves and the name on the door soon stood for their values, not the donors’ values. The second wave of philanthropists, now poised to enter the marketplace, is determined to avoid that mistake. They want to embed their own values in the foundations that bear their names. Now, thanks to the emboldening example of the Robertsons, they have the tools to do so.

During the long years of this case, I came to think of the jury as being 51,000 members strong: the Princeton alumni. To have a chance at success, we had to persuade the alumni to give us a hearing — to consider the possibility that our cause might be just. Bill, himself an alumnus, was brilliantly effective in that role. Subtle pressure on the university from its alumni turned out to be an important factor. The other 1,000 members of the jury were these second-wave philanthropists — men and women who have acquired significant resources but have lacked the confidence to pull the trigger on a new foundation. They followed this case closely. In many cases, microscopically. Several times each week, I found myself in animated conversations with these second-wave donors — parsing legal motions, interpreting rulings and, even more frequently, receiving legal advice copiously proffered. It helped the fluidity of these conversations that neither I nor most of my callers happened to be lawyers.

When the case was finally settled, these second-wave donors were both heartened by the result and instructed by the process. They have learned the importance of honing the mission statement to a sharp edge — the necessity of establishing durable, all-weather governance procedures — the critical nature of personnel decisions at both board and staff levels. They appreciate that an entire cadre of lawyers, accountants, and consultants has been blooded in the battle with Princeton. And they know that, thanks to the Robertsons, the rights of donors have been reasserted and re-established. They know that, thanks to the Robertsons, grantees have been reminded in an unforgettable way of their obligations to donors.

Let me close with a comment about our host, John Von Kannon.

I have tended to be skeptical about claims daughters make about their fathers since the day my own daughter announced to her fourth-grade classmates that I was the best basketball player in the country. One of the boys in the class said that seemed unlikely, seeing as how I was slow, short and fat. I never liked that kid. Well, now we have Von Kannon’s daughter describing her father as “the best fundraiser in the country.” Having pondered that claim a bit, I’ve come to believe it’s not outlandish if you add six words — and say he’s the best fundraiser in the country for the cause he believes in. If he worked for ACORN or MoveOn.org, you could just ink his name in at the bottom of those monthly production charts. He would be the guy they send out for doughnuts during staff meetings. All of you in this room know how effective he is for the cause he believes in. If he hadn’t already separated you from a large check, you wouldn’t be here today. But it may not have occurred to you to tap his knowledge of your common cause. That cause today is a vast, membranous, spider-web of thinkers and doers, hype and deed, cause and sub-cause. No casual student can hope to navigate that murky terrain on his or her own. John Von Kannon has been studying — and building — this complex organism for 30 years. He knows what works and what doesn’t. You should tap that knowledge. In two specific ways. First, by locking down your own legacy, lest it get hijacked by people who seek to substitute their own values for yours. And second, by practicing the buddy system. Everybody in this room knows one or three or five of the 1,000 philanthropists of the second wave. Bring them in. Let Von Kannon help them lock down their legacies.

And finally, a word about my friend, Bill Robertson. For more than two decades, there has been much grumbling in our ranks about violations of donor intent — about deals that turned out not to be deals, about agreements that evolved to meet QUOTE new realities UNQUOTE, about donor intentions left torn and twisted. By the end of the Nineties, the concept of donor intent itself, eroded by the constant, self-serving puling of the nonprofits, had been reduced to little more than a rhetorical pose. The attitude of grantees toward donors had become, basically, “Give us the check and then sit down and shut up.” To turn that tide, to return the relationship between donors and grantees to its traditional equilibrium, required that somebody draw a line in the sand and say, “This far and no farther.” That’s what Bill Robertson and his family did. To the benefit of everybody in this room. (The next time one of your grantees is seized with larcenous impulse, it may be necessary only to whisper in his ear the magic word, “Princeton.”) I hope you will thank Bill for his great service — and honor it by applying the lessons of the Robertson case to your own philanthropy.

Thank you.

– Neal B. Freeman is Chairman of the Foundation Management Institute and can be reached at [email protected].