Click the picture (or here for a PDF of the article Duke University Makes Claim on Estate of Aubrey McClendon – WSJ) and check out an article about how Duke University filed a claim against the estate of the late Aubrey McClendon for close to $10 million in unfulfilled pledges.
We have no doubt that the pledges were legally binding.
What we should be doubting is whether this was the right move by Duke or not. $10 million is a decent amount of money, even for Duke and its $6+ billion dollar endowment.
But here are a few questions I would have hoped Duke considered before embarking down this road:
- What is the likelihood that this story will end up on the front page of the Wall Street Journal – embarrassing the university and possibly sending a chill towards major donors making legally binding commitments (by the way, someone from Princeton told me that their policy is make all pledges NON-legally binding)?
- What is the likelihood Duke will receive their share considering Mr. McClendon may not have any wealth left by the time they get to unsecured creditors like Duke?
- What if it turns out that Duke will be taking funds while McClendon’s widow and/or kids receive nothing due to the state of his finances?
I am a huge fan of using legally binding pledge commitments when appropriate and even filing claims to collect on them – when appropriate.
But here, I wonder if this was the right move. I know they had to file a claim before the deadline – and only afterwards will they know the answer as to whether there is enough to go around. Still, the first negative bullet point already came to fruition today.
Suing a donor or his/her estate should always be a last resort. However, there are times when taking legal action is entirely appropriate, particularly if doing so honors the donor’s intention. For more on this, checkout a post I published sometime ago by Brian Sagrestano, Robert Wahlers, and me: https://michaelrosensays.wordpress.com/2013/01/25/to-sue-or-not-to-sue-over-unpaid-pledges/ . The post involves legal action taken by the Kansas City Art Institute.