About The Honor Bound Initiative
When a wealthy benefactor donates a large sum of money to an institution such as a public university, the university typically signs a written agreement promising to invest that sum permanently and to restrict its spending of the investment earnings to the purposes specified in the agreement. Most endowment agreements commit the university to spend the endowment’s earnings on student scholarships.
Some of Ohio’s state universities have broken their commitments to their donor community, both private and public, accepting their generous funding for one purpose and then using it for something else, hurting the students it purports to serve.
Ohio is the only state in the nation whose laws shield universities from accountability for spending certain proportions of privately-funded endowments, enabling universities to spend funds earmarked for student scholarships to pay for operating expenses unrelated to managing the endowment that supplied the funds.
This issue was brought to attention through Ohio State and The Honor Bound Initiative believes no university or charitable institution should be exempt from following the law.
Furthermore, all proposed changes to the law should apply to all charitable institutions.
The Honor Bound Initiative’s mission is to serve as a watchdog to shine a spotlight on what state universities have done, and are doing, with the millions of dollars they receive from their supporters and how they have used donations for reasons that the donor did not approve.
With student debt at an all-time high of $1.4 trillion, the students at Ohio’s state universities are the ones being MOST impacted by the siphoning of funds from these endowments – millions spent each year on wining and dining wealthy patrons.
Your philanthropy was not supposed to underwrite a university’s development office and its social events. It is supposed to provide education and financial assistance to deserving students.
Many hundreds of donors don’t know that state universities have been spending their endowment funds on cultivating relationships with other wealthy benefactors.
The General Assembly must restore accountability where universities spend privately-supplied endowed funds outside the authority of their endowment agreements.
Simply put, our goal is to restore the original purpose of these donor programs’ very existence: helping students – first, last, and always.
We believe state universities makes a solemn vow when accepting funding from people who provide their hard-earned money to the university. That vow: to use the donor’s money for exactly the beneficial purposes that the donor and university agreed upon.
The General Assembly must update the law to ensure any benefactor who signed an endowment agreement and discovers a breach can demand that the attorney general cure the breach within a specific timeframe or the benefactor will be allowed to sue the university to enforce the agreement. The benefactor would have no right to sue for damages, only to stop the breach and restore misspent funds to the endowment.
We need to make universities accountable for breaching their endowment agreements by overspending endowed funds and give benefactors the ability to hold institutions accountable.
Renewing Our Promise.
Restoring Our Purpose.
The Honor Bound Initiative will shine a bright light on the administration of donations to Ohio’s state universities, highlighting instances of spending donor money that donors did not approve and exposing waste and abuse. It is only through absolute transparency and unwavering accountability that true and lasting change can occur.
It is our goal that no other donor enters into an endowment agreement with a state university without knowing how that university really spends your endowment funds.
These agreements are contracts; a university’s promises about how it will spend an endowment’s funds induce the benefactor to sign the agreement and then provide the funds. Ohio’s public universities spend tens of millions of dollars of privately-endowed funds each year to pay their “advancement” staffs’ salaries and to entertain wealthy alums to coax them into establishing new endowments.
Ohio is the only state that gives universities and other charitable organizations complete legal immunity when they spend a percentage of the market value of a privately-funded endowment in any given year.
Not only does that immunity eliminate real accountability for that spending, but the universities and the attorney general insist that benefactors who enter into endowment agreements cannot enforce their own agreements. They insist that only the attorney general has legal authority to enforce spending restrictions in endowment agreements. But there is no record in any Ohio appellate court in Ohio history suggesting that the Attorney General has ever enforced a public university’s breach of a privately-funded endowment agreement.