President's Pages in Princeton Alumni Weekly
The Robertson Litigation
March 22, 2006
Not long after I was elected president, I was visited by Jay Sherrerd ’52, a long-time Princeton trustee, who wanted to talk with me about the Robertson Foundation. This foundation, which under tax law is a “supporting organization” of the University, was established in 1961 with a gift of $35 million from Marie Robertson, wife of Charles Robertson ’26, for the purpose of supporting an expanded graduate program in the Woodrow Wilson School of Public and International Affairs.
In order to secure the tax advantages of her gift, Marie Robertson’s representatives told the IRS that it was “for the use of Princeton” and that “Princeton, as the ultimate beneficiary, has control” over it. That control was created by giving University-designated trustees a majority of seats on the foundation board. This governance agreement was essential to President Goheen because the University could not responsibly make such long-term commitments as constructing buildings and hiring tenured faculty for the Woodrow Wilson School without some assurance that the resources to support such expansion would continue to be available.
In 1970, Charles Robertson (who served as president of the foundation from its inception until shortly before his death in 1981) confirmed to the IRS that the University’s requirement of “effective control of the foundation” in order to “undertake the long term commitment involved in the project” was “agreed to by the donors.”
When Jay visited me, he already had served for many years as one of the four University-designated trustees on the seven-member Robertson Foundation board and, along with former Princeton trustee John Beck ’53 and William Robertson ’72, was a member of the foundation’s investment committee, which was responsible for investing the foundation’s endowment. They had an excellent record, but as the foundation’s endowment approached half a billion dollars and financial markets became ever more complex, Jay and John believed it was no longer fiscally responsible for anyone to manage the endowment on a volunteer basis. They proposed that the foundation engage a professional manager under the auspices of the foundation’s investment committee, and they thought that far and away the best manager it could engage would be the Prince-ton University Investment Company (PRINCO), which very ably manages the University’s endowment.
This proposal was strongly opposed by Bill Robertson, who had served on the foundation board since 1975 and who on many occasions over the long history of the foundation had expressed strong support for the Wilson School and the graduate program the foundation supports.
My first foundation board meeting occurred in April 2002. In response to objections from the Robertson family about the proposed professional management for the endowment, the board agreed to review the proposal and, later, to consider a number of potential managers before making a final decision. In response to other objections from the Robertson family about some of the relatively informal governance practices that the foundation had followed with their concurrence since its inception, I proposed a careful review of governance, disclosure and budgetary practices. That review has led to a number of reforms, which have been instituted despite persistent opposition by the family trustees.
Not long after that April 2002 meeting, I achieved what I consider one of my greatest accomplishments as president of the University and of the foundation: persuading Anne-Marie Slaughter ’80 to return to Princeton as dean of the Wilson School. As an expert in international law, she seemed to me not only exactly the right person to lead the school at this point in its history, but someone whose own interests and priorities aligned exceedingly well with the mission of the Robertson Foundation, which is to provide young men and women dedicated to public service with the knowledge and skills that would qualify them for careers in government service, particularly in international relations and affairs.
Given our responsiveness to their concerns at the April 2002 meeting and the appointment of Dean Slaughter, we were taken aback when the Robertson family decided in July 2002 to file suit in a New Jersey court seeking to prevent the engagement of professional management for the endowment, to impose retroactively upon the foundation an exceedingly narrow definition of mission for the expanded graduate program as essentially a training program for the foreign service, and to reclaim for other purposes the funds their parents had given to Princeton.
Three and a half years later, this case has already cost both sides many millions of dollars, with the Robertsons using the earnings and assets of a private family foundation to cover their costs. It has consumed countless hours that could have been devoted to far more productive activity. Meanwhile, PRINCO has been engaged, and in its first 24 months of involvement, the foundation’s assets grew from $561 million to $695 million, an increase of almost 24 percent. Governance reforms have been instituted, and a new and more transparent formula to allocate foundation funding of school expenditures has been adopted. The review of 45 years of financial records by our forensic accountant has found that, despite claims of mismanagement and misspending, almost none of the family’s contentions hold up to scrutiny. To cite just one example: a particular fellowship program that has received much press attention was funded entirely by non-Robertson endowments.
Most importantly, despite all the time and resources it has consumed, the lawsuit has not prevented Dean Slaughter from taking what was already one of the world’s leading schools of public and international affairs and making it even better. She has assembled one of the world’s finest faculties in international affairs; she has brought many distinguished former federal officials to teach or to visit at the school; and she continues to attract some of the world’s very best graduate students and prepare them to serve the government, either directly out of graduate school or later in their careers, and either in government or in the many kinds of organizations that work with and for the federal government in this country and around the world. We are proud of the fact that 87 percent of last year’s graduating class took jobs in the public and non-profit sectors, with 53 percent working for governments or international organizations such as the United Nations and the World Bank. Earlier this year Dean Slaughter announced a new program, Scholars in the Nation’s Service, that is designed to encourage even more students—both undergraduate and graduate students—to enter government service, especially students with skills in the sciences and engineering and in such critical languages as Arabic and Chinese.
As this case has made its way slowly through the courts and occasionally into the press (and not always in an accurate or balanced way), I have appreciated the support of many alumni who know how carefully the University works to ensure that gifts are used for their intended purposes, and especially of alumni of the Wilson School who know how thoroughly committed it is to its mission. It is my fervent hope that this case will be adjudicated as quickly and efficiently as possible so that we all can devote our energies not to the courthouse, but to the classroom, and to the teaching, research and public service that the Robertson Foundation resources make possible.