What You Should Teach Millennials About Values

When Should a College Return an Endowment?

Should St. John’s University (Minnesota) Return the $300,000 Lindmark Endowment?

This is an updated blog posted on my website earlier this week.

It’s an intriguing question. When should a university be forced to return an endowment because it hasn’t been used for the designated purpose? A case in point is a $300,000 endowment established by Roger Lindmark, a 1974 graduate of St, John’s University in Collegeville, Minnesota. Lindmark’s endowment is designed to “fund two students each year to spend the summer researching and writing papers about corporate-business ethics,” according to Minnesota Public Radio. Students selected for the endowment receive a $7,000 stipend to spend the summer on campus doing research on ethics and writing a paper.

Lindmark claims the papers written are not consistent with his intent in donating the funds, consequently the $300,000 should be returned. The topics of some of the papers seem somewhat far afield. For example, one was on soil conservation; another on romance in the workplace. The Minnesota Star Tribune reported that: “The object was for the students to produce a substantive academic paper which could be submitted for publication,” according to Lindmark, but the papers did not meet the criteria. Endowment-data

Lindmark is suing the University in federal court, demanding that the fellowship program be disbanded and that all leftover funds be returned to him. It was also reported that St. John’s sought to clarify and modify the purpose of using Lindmark’s funds to no avail. The University is seeking to assert its rights over the funds through a petition filed in Stearns County District Court.

Should St. John’s return the $300,000? This is not an easy question to answer. The problem as I see it is two-fold: First, the meaning of “corporate-business ethics” is vague. Second, there does not appear to be a stipulation in the endowment agreement that a faculty member should be assigned to work with each student to keep them on track and ensure their research meets both the letter and spirit of the endowment.

Who is to blame for the misunderstanding? Both parties, I would say, but mostly the blame falls on the shoulder of St. John’s. Lindmark should have elaborated on what he meant by a corporate-business ethics paper. The University could be blamed as well for failing to provide guidance in this regard, although some universities want endowments to be vague so they have more leeway in deciding how to use the funds – i.e., what is and is not an acceptable topic.

Endowment agreements do not necessarily include a provision that a faculty member should be assigned to monitor student-recipient progress. Generally, that decision is left up to the university based on the understanding it is an ethical obligation to ensure an endowment is used for its designated purpose. One problem is if the endowment doesn’t address faculty oversight, then the university would have to use its internal funds for that purpose. Perhaps St. John’s did not want to do so.

It’s clear to me the endowment was made without a true understanding of what is meant by “business ethics.” In a broad sense, business ethics could be defined as the study of business policies and practices that affect stakeholders (i.e., shareholders, creditors, employees, customers, suppliers, the government, and society). Issues such as corporate social responsibility fit nicely into this definition. Could a paper on soil conservation or romance in the workplace qualify? Yes, if the limits of the paper were properly defined. For example, soil conservation relates to environmental policies or so-called green issues. How could anyone deny that romance in the workplace is an ethical issue? Just think about all the sexual harassment claims in virtually every field, including business, since the Harvey Weinstein affair.

Why penalize the students for something they didn’t create? Lindmark and St. John’s should get together and redefine the scope of the endowment to include a variety of acceptable topical areas. Here some examples:

  • What makes for an ethical corporation?
  • Organizational influences of ethical decision-making
  • Workplace ethics issues
  • Preventing fraud in business corporations
  • Policies to deal with whistleblowers
  • Corporate governance
  • Corporate social responsibility

Lindmark and St. John’s also need to come to an understanding about faculty involvement and whether part of the endowment funds could be used for that purpose. It seems to me an acceptable approach is to allocate 20 percent of the endowment funds to faculty oversight. So, the $7,000 stipend would be $5,600. Of course, the amount of each endowment could be increased to $8,750, which would keep the payment to students at $7,000.

Lindmark should be praised for establishing an endowment for students to study and write about corporate-business ethics. Who can deny this is a big problem today when many claim corporate policies and practices are not benefiting all of society; corporate social responsibilities are not being met; excessive executive pay puts workers at a disadvantage; and equity, diversity and inclusion policies are lacking?

The bottom line is cooler heads should prevail in resolving the issue to maximize the net benefits to students and society.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on June 20, 2018. Dr. Mintz is a Professor Emeritus from Cal Poly, San Luis Obispo. Visit his website and sign up for his Newsletter.

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