Paul L. Caron

Thursday, July 11, 2019

Hillsdale College Sues University Of Missouri Over $5 Million Donation

MLive, Hillsdale College Sues Over $5 Million Gift to University of Missouri:

HMHillsdale College is suing the University of Missouri, claiming an endowment gift from a deceased MU alum is not being spent according to his wishes.

Hillsdale claims it is entitled to the $5 million endowment gift left in the will of Sherlock Hibbs in 2002 that directed Missouri’s Board of Curators to divide the funds into six separate funds named by Hibbs.

In the lawsuit filed in 2017, Hillsdale claims the university found the terms of the gift “distasteful” and was concerned MU and its Business School were being “held hostage by a particular ideology,” ultimately disputing that his gift resulted in a trust, according to the lawsuit.

Hillsdale, according to the lawsuit, had incentive to police Missouri’s compliance of the terms of the gift because it would forfeit the funds to Hillsdale if the university did not comply.

Hibbs, a 1926 graduate of Missouri, required the university to establish three separate chairs, funded at $1.1 million each, and another three distinguished professorships, with two funded at $567,000 and another at $566,000, according to the lawsuit.

The will required each appointee be a “dedicated and articulate disciple” of MU’s Ludwig von Mises Austrian School of Economics, which emphasizes free markets, private property and limited government, according to the lawsuit.

Missouri Spokesman Christian Basi said the university always spends gift funds per the explicit wishes of its donors. ...

Former Missouri Gov. Jay Nixon, who is representing Hillsdale in the lawsuit, said Hibbs served in World War II after graduating from Missouri. After serving, he began a successful career in finance where he witnessed the principles of fiscally-conservative, free-market economics.

The $5 million gift was given for the specific purpose of teaching that style of economics to a new generation, Nixon said.

“Mr. Hibbs named Hillsdale College not only to ensure that his gifts were used as described in his will, but also to take action if the intent of his gift was not fulfilled,” Nixon said. “Hillsdale takes that obligation very seriously. Hillsdale College looks forward to thorough discovery into why the University of Missouri changed the terms of Mr. Hibbs’ gift.”

Update:  Chronicle of Higher Education, Hillsdale College Sues U. of Missouri for a Dead Donor’s Money. It Gets Weirder.

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If a university is not going to spend the money according to a benefactor's wishes, then it should not take the money. It is that simple. That's particularly true when the benefactor suspects, quite rightly in this case, that the money will not be spent as he wished and has appointed another school—one with integrity—to ensure that his wishes were fulfilled.

This illustrates an adage that "when there is doubt, there is no doubt." The unease that Mr. Hibbs felt about the University of Missouri's integrity has proved true. They're having to be sued to make them do what they should do as a matter of course.

My hunch is that if discovery is broad enough, it may turn up other instances where the wishes of benefactors were ignored.

Posted by: Michael W. Perry | Jul 11, 2019 6:09:55 PM

The interesting thing is, no one needs to bribe universities to teach classes on econometrics or valuation or corporate finance or machine learning. But the "Austrian School of Economics" has all of the real world usefulness and academic legitimacy of Lamarckian evolution or theories of phlogiston or phrenology.

The basic idea of the Austrian school is that it's impossible for a remote central decision-maker to make good decisions because locals always have better information. Anyone whose ever heard of Google or Amazon or Walmart or Oracle, or China or Singapore, for that matter, knows this is a theory that's a few decades out of step with the modern economy and modern technology, as clever as it may have seemed to people in the 1920s.

Posted by: What? | Jul 11, 2019 4:57:10 PM

"Leftists gotta left"? What? This is about the Austrian school of economics, which is opposed to progressivism.

Posted by: Murray Rothbard | Jul 11, 2019 8:58:29 AM

"Leftists gotta Left". At what stage is the action? Discovery complete?

Posted by: Bruce Chitiea | Jul 11, 2019 6:28:30 AM