I think we can all agree that major transformational gifts are a great thing. Seven- and even eight- figure gifts completely transform an organization and those that benefit from its mission. Most of these gifts are years, if not decades, in the making as these relationships take time—for example, Ruth Gottesman and her late husband Sandy had a 40 plus year relationship with Einstein before making her transformational $1 Billion gift in 2024.
All donors want to make an impact, and our organizations want to help them with their giving. However, sometimes the excitement surrounding these mega gifts can occlude good sense and reason, even from the most experienced professionals. In the past, there have been a few examples of the excitement overriding reason, but I’m afraid this will become more and more common in the future. The question remains, what is our role in donor relations when it comes to due diligence?
In most instances, only 4 to 5 people at the organization know about these gifts before they happen, and often donor relations is sitting on the outside as an observer. The most notable example (up until recently) was at Portland State University— WITHOUT a gift agreement, they announced the gift, and were heading toward a public ceremony when a staff member discovered through a Google search that the donor was insolvent! Senior leadership involved with the gift at the University lost their jobs along with the “gift.”
Another example comes from Centre College in Kentucky where they announced the gift of $250 Million, but they hadn’t agreed on terms with the donor.
The VP was then quoted as saying, “While this didn’t work out this time, I’ll be coming back to bend his ear and twist his arm, because it’s a compelling good we’re working toward.” I mean, good grief, there are so many problems here it’s hard to know where to begin.
Where was donor relations in this situation? Where was the due diligence, accountability and vetting before the announcement was made public?
And now, here we are again, experiencing some major doubt about a donor and their mega gift. This one raises all my red flags, sets off bells and whistles and makes me shudder to think of the consequences. The example comes from Coastal Carolina and Florida A&M University:
Coastal Carolina announced, in 2020, a mega gift of over $90 million dollars from a non-alumnus who specializes in the hemp industry. Gregory Gerami is the donor’s name, and until 6 months before he pledged the gift, he was completely unknown to the University. He was 28 at the time, and over $60 million of the gift was a PLANNED gift in his estate. Eventually the gift fell through and the donor backed out. While the details are still murky and vague, the reality is, when someone shows up at your door, out of nowhere, a big dose of skepticism is required. Where was the due diligence and research on the donor? How was this ever publicly announced when so much of it was up in the air?
And now, in 2024, Mr. Gerami has resurfaced promising another massive gift to ANOTHER university—this time it’s $237 million-plus to FAMU. The gift was announced at their commencement, where they had also made him the speaker. According to FAMU, Gerami has already provided the gift but no one will talk about it because of an NDA. But a quick online search uncovers a criminal record for Gerami as well. He supposedly served time in prison for an assault charge in 2022 and has a $1,500 judgment outstanding. Mr. Gerami has already transferred $237 million for FAMU, yet can't pay a $1,500 judgement? Where is the due diligence of a background check of this donor? How was he vetted both in background and funding sources? For example, you can’t shop for a home without proof of funds, yet Mr. Gerami is now 31 years old, runs a hydroponic farm, and apparently his gift is coming from a trust that has no record or mention online until the gift announcement at FAMU’s commencement. Here is his company’s website: https://www.battersonfarmscorp.com/
You can, and should, always make your own decisions here. What I’m wanting to address is the issue of due diligence. How much should we dig into a donor’s background before we accept their money? Are there donors we don’t want to do business with in general? What is the reputational and trust risk when these mega gifts fall through? Do you have a documented process at your organization to vet these mega donors? Is your donor relations team involved at all? Is your public relations team involved? What does it look like?
While we all get excited when the big checks and big donors come in, we must also proceed with caution. Are they using our brands and associating with us to raise their profile? Is there fool’s gold at the end of the rainbow? Bad press is not great for our reputations, and our other donors are watching us chase this money… When is the right time to walk away?
I’d love to hear your thoughts on the topic.
Cheers,
Lynne
