Robertson Foundation lawsuit Q&A
Updated December 18, 2008
Here are responses to questions regarding the lawsuit filed against Princeton University by William
Robertson and other members of the Robertson family in July 2002.
Background
1. What is the Woodrow Wilson School?
The School of Public and International Affairs, as it was originally named, was founded at
Princeton in 1930. As its name suggests, it was created to prepare students for leadership in public
and international affairs. In 1948 the School’s graduate program was established and the School
was renamed to honor former Princeton President, and former U.S. President, Woodrow Wilson. In
September 2005, the Woodrow Wilson School celebrated 75 years of preparing talented individuals
for careers in the service of the nation and the world.
Today, the School offers a distinctive inter-disciplinary undergraduate program and three graduate
courses of study: a two-year, full-time, residential Masters in Public Affairs program; a one-year,
intensive, mid-career Masters in Public Policy program; and a rigorous Ph.D. program. The School
educates a wide range of students from the U.S. and around the world who seek to apply their
knowledge and skills to the solution of vital public problems in both the domestic and international
realms. It boasts a public policy-oriented faculty of exceptional teachers who are also superb
scholars and practitioners in disciplines that include politics, economics, sociology, psychology,
physics, molecular biology and geosciences. Individually and as members of a variety of worldclass research centers and programs, these faculty examine and influence the international and
domestic policy environment through research and outreach efforts, which in turn add depth and
vitality to the teaching program.
2. What is the Robertson Foundation?
In 1961, Marie Robertson, wife of Charles Robertson, Princeton Class of 1926, bestowed a
generous gift on Princeton in the form of $35 million of shares in The Great Atlantic and Pacific
Tea Company to expand and support the graduate program at the Woodrow Wilson School of
Public and International Affairs. The structure which Mrs. Robertson used for her gift would now
be described as a “supporting organization” of Princeton University. [See: Question 18] This
organization was established as a non-profit Delaware corporation, called the “Robertson
Foundation,” the assets and income of which were dedicated “to and for the use of” Princeton
University.
3. Who was the donor?
Marie Robertson was the donor. The A&P stock worth $35 million that was used to found the
Robertson Foundation was held in her name. Mrs. Robertson died in 1972.
4. Who was Charles Robertson?
Charles Robertson, a 1926 graduate of Princeton University, was Marie Robertson’s husband. For
the Robertson Foundation’s first 20 years, Mr. Robertson chaired its board. In 1977, he wrote that
he “never had cause for regret” that his wife had provided support for the Woodrow Wilson School,
which he described as “first rate” and “doing an outstanding job.” Mr. Robertson died in 1981.
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5. How is the Robertson Foundation governed?
The Robertson Foundation is a Delaware non-stock, not-for-profit corporation governed by a
seven-member Board of Trustees. In accordance with the Foundation’s governing documents, and
to satisfy applicable tax law [See: Question 18], Princeton appoints four members to the
Foundation’s board and the Robertson family appoints three members. This governance structure
has been in place since the Foundation was incorporated in 1961. [Document: Excerpts from the
Foundation Certificate of Incorporation and the Foundation Bylaws] From the founding of the
Foundation in 1961 until his passing in 1981, Marie Robertson’s husband, Charles, chaired the
board, and in that capacity he played an active and valued role in supporting the expansion and
development of the Woodrow Wilson School’s graduate program. Since 1981 the board has been
chaired by the President of the University.
The Foundation’s board meets no less than annually. The Foundation has a committee that oversees
investment strategy, as well as a budget committee that reviews the Foundation’s spending.
6. Why did the donor and Princeton agree on this governance structure?
This structure was important to both the donor and to Princeton.
Mrs. Robertson's advisors wanted to make certain that her charitable gift received favorable tax
treatment allowed under the law. To obtain a ruling from the Internal Revenue Service granting
such treatment, Mrs. Robertson's representatives made written commitments to the federal
government that Princeton, not the Robertson family, would control the Foundation—a requirement
for the tax benefit that Mrs. Robertson received for the gift. [See: Question 19] [Document: Excerpt
from the May 4, 1961 Myers Memorandum]
Princeton made clear that it could not accept the gift without legal certainty that the University
would maintain control over the Foundation and receive continuous financial support. [Document:
President Goheen's May 1, 1961 Letter] This certainty was essential before Princeton could
undertake such major and long-term commitments as constructing new buildings and hiring tenured
faculty. [See: Question 32.]
7. Who were the original Robertson-designated trustees?
The original Robertson-designated trustees were Marie Robertson’s husband, Charles, General
Andrew J. Goodpaster, and Eugene W. Goodwillie.
For twenty years—from the founding of the Foundation in 1961 until his passing in 1981—Charles
Robertson chaired the board.
General Andrew J. Goodpaster, a 1950 graduate of the Woodrow Wilson School’s graduate
program, was a trustee of the Foundation for 41 years, from its inception in 1961 until he resigned
on June 18, 2002, just one month before his fellow Robertson-designated trustees sued Princeton
and the University-designated trustees to the Foundation. General Goodpaster spent more than four
decades in public service, including as White House staff secretary to President Eisenhower, NATO
Supreme Allied Commander, and commandant of West Point.
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Eugene W. Goodwillie was a close friend and counselor to Charles and Marie Robertson. Mr.
Goodwillie was a trustee and secretary of the Foundation from its inception in 1961 until his death
in 1974. A practicing attorney, Mr. Goodwillie was an active participant in the creation and
organization of the Foundation.
8. Who are the current members of the Robertson Foundation board?
The four Robertson Foundation trustees appointed by the University include Princeton President
Shirley Tilghman, Princeton trustees Peter Wendell and Stephen Oxman, and Thomas Kean, former
New Jersey Governor, president of Drew University and chair of the 9/11 Commission.
The three trustees appointed by the Robertson family are the donor’s son and daughter, William
Robertson and Katherine Ernst, and Robert Halligan, who has stated that he is a distant relative by
marriage of Charles Robertson. They are plaintiffs in the lawsuit against Princeton.
9. How has the Robertson Foundation governance process evolved since President Tilghman
became President of the Foundation?
As president of Princeton University, Shirley Tilghman is president of the Robertson Foundation.
Starting with her first Foundation board meeting in 2002, prior to the initiation of the lawsuit,
President Tilghman has worked to promote an operating philosophy of transparency and
accountability.
It is unfortunate that Mrs. Robertson's children chose to file a lawsuit instead of supporting
President Tilghman's goals of modernizing the Foundation's governance procedures. Nonetheless,
despite resistance by Mrs. Robertson's children (frequently underscored by their bloc-voting against
governance reforms proposed by the University-designated trustees), President Tilghman has
guided several new governance and spending initiatives at the Foundation, including:
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Detailed reporting and formalized advance approval for future capital construction
expenditures.
Improved financial reporting and presentation of advance budgets that show prospective
Foundation expenses in detail.
Formalized advance approval for ongoing expenditures to support centers, programs or
projects in excess of $250,000 a year.
Updating the framework for determining and allocating Robertson Foundation
contributions to the Woodrow Wilson School’s graduate program (the 40-year-old
“Bowen Formula”) by instituting a modernized funding allocation process (the “Slaughter
Formula”) and creating a Foundation budget committee. [See: Question 30]
Appointing an independent Secretary-Treasurer for the Foundation who exercises
responsibility to authorize the transfer of funds.
Proposing and adopting formal treasury services and investment management agreements
between the Foundation and the University. The investment management agreement
governs the additional layer of investment management of the Foundation’s assets now
provided by the Princeton University Investment Company. [See: Question 35]
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Key Issues
10. Who is suing Princeton?
Plaintiffs in the Robertson Foundation lawsuit are William Robertson, Katherine Ernst, Robert
Halligan and Anne Meier. Robertson, Ernst and Meier are children of Charles and Marie
Robertson; Halligan has stated that his wife’s mother was a relative of Charles Robertson.
Robertson, Ernst and Halligan are the current Robertson family-designated trustees on the
Foundation board. The plaintiffs are suing four individuals (President Tilghman, current trustees
Wendell and Oxman, and a former trustee, the late John J.F. Sherrerd) and the University.
11. What are the key issues in the litigation?
Plaintiffs would like to narrow the Foundation mission from the one agreed to by the University
and the Robertsons in 1961, take control of the Foundation themselves and remove Princeton
University as the beneficiary of the Foundation. [See: Question 13] They now claim that the
Woodrow Wilson School graduate program supported by Foundation funds should have been
limited to a kind of vocational program, designed for the sole purpose of training students for
positions in the State Department and a handful of other federal government departments that
graduates would be expected to fill upon graduation. [See: Question 25] Plaintiffs also would like
to reverse the decision by the Robertson Foundation board in 2003 to appoint the Princeton
University Investment Company as the Foundation’s investment manager. [See: Question 36]
The litigation is not about whether the recipient of a charitable gift has an obligation—legal and
moral—to fulfill the commitments it makes in accepting the gift. Princeton agrees that it does, and
the University has an excellent record of meeting its commitments and sustaining strong
relationships with donors over more than two centuries.
Questions posed by this litigation include the following: Can a donor’s descendants:
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Re-write a 46-year old governing gift instrument so they can seize control of the gift?
[See: Question 12]
Convince a court that this Type I supporting organization should not be governed as
federal tax law requires? [See: Question 18]
Convince a court to revisit, item by item, spending decisions made over four decades by
educators who used the gift to develop one of the world’s preeminent graduate schools of
public and international affairs where, as specified in the gift instrument, students may
prepare for positions in government service with emphasis on international affairs? [See:
Question 41]
In posing these questions, the plaintiffs are seeking to use this lawsuit to redefine some of the
fundamental principles of American philanthropy and overturn some of the laws and best practices
that govern charitable organizations.
When the Foundation was incorporated in 1961 with Marie Robertson’s gift of $35 million, its
purpose was to maintain and support at Princeton and as part of the Woodrow Wilson School a
graduate school in which men and women dedicated to public service may prepare themselves for
careers in government service (particularly federal government service in areas concerned with
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international relations and affairs). [Document: Excerpt from the Foundation Certificate of
Incorporation]
The Woodrow Wilson School has always been and remains one of the world’s leading schools of
public and international affairs; its students are well prepared for careers in government service at
local, state, federal and international levels. Consistent with the emphasis sought by the donor, its
faculty is especially strong in the fields of international relations and affairs. The Foundation’s
Certificate of Incorporation explicitly authorizes support for the School and its students, and for
“collateral and auxiliary services, plans and programs” including “internship programs, plans for
public service assignments of faculty … and programs for foreign students.” [See: Question 22]
[Document: Excerpt from the Foundation Certificate of Incorporation]
Through her advisors, Mrs. Robertson expressed a clear intention to make Princeton University the
sole legal recipient of her gift and to give Princeton control of a majority of seats on the Foundation
board of trustees. Even though the manner in which Mrs. Robertson made her gift ensured that
Princeton, through its appointment of a majority of the Foundation board, would always control the
assets of the Foundation, the current Robertson family trustees are seeking to overturn this intent
and gain control over the Foundation’s assets for themselves so they can spend them at other
institutions and in ways other than the way chosen by their parents.
For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law
firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as
litigation counsel to Princeton University and the individual defendants in the Robertson litigation.
12. Don’t Mrs. Robertson’s children claim this case is about “donor intent?”
They make this claim, but the fact is that Mrs. Robertson’s clear intent was to donate the $35
million to Princeton—not to leave it in the control of her children. The only restriction imposed
upon Mrs. Robertson's gift was that the Foundation’s assets be used in accordance with its
Certificate of Incorporation.
The creators of the Foundation, including Charles Robertson and University president Robert
Goheen, put in place a governance mechanism that provides majority control of the Foundation
board to trustees appointed by the University so that it can make the kinds of academic decisions
and long-term commitments that are essential to sustain a world-class graduate program.
[Document: Excerpt from President Goheen's May 1, 1961 Letter] The organizing documents were
drafted by Charles Robertson’s friend and counselor, Eugene Goodwillie, and in 1970 Mr.
Robertson personally told the Internal Revenue Service that the University’s “effective control of
the Foundation” was “agreed to by the donors.” [Documents: Excerpt from Charles Robertson's
August 20, 1970 Notification Concerning Foundation Status; Charles Robertson's August 7, 1970
Letter] [See: Question 19; Question 32] Through their litigation, Mrs. Robertson’s descendants are
seeking to overturn this governance mechanism, and to substitute their judgment for that of the
University as to how best to utilize Foundation funds to educate students, recruit and retain faculty,
design curriculum, encourage research and promote an array of other activities that contribute to a
robust and productive intellectual and pedagogical community.
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Unlike plaintiffs, Princeton believes the decisions that were made by the donor and written down
more than 45 years ago should continue to be respected, including the decision to donate funds
“exclusively for the benefit of Princeton” and the decision to create a governance structure for the
Robertson Foundation that “is controlled by Princeton.”
13. What are plaintiffs seeking in this litigation?
Plaintiffs have asked a New Jersey court to transform the Foundation from a supporting
organization committed to the Woodrow Wilson School graduate program at Princeton University
into a private foundation controlled by them, in effect severing the relationship between Princeton
and the Robertson Foundation.
This attempt by certain Robertson family members to gain control of the assets of the Foundation is
fundamentally at odds with the unambiguous agreement that the donor and her husband made with
Princeton. This agreement, as reflected in the Foundation’s Certificate of Incorporation, provided
that the Foundation’s purpose was to “contribute, lend, pay over, or assign the income of the
corporation and/or the property of the corporation…to or for the use of Princeton….” [Document:
Excerpt from the Foundation Certificate of Incorporation] As General Goodpaster—who served on
the Foundation board for 41 years, including 20 years alongside Charles Robertson—testified:
“[Charles Robertson] was very devoted to Princeton. He was a Princetonian himself and had many
stories to tell of his time at Princeton. He really loved the school. There was no doubt about it. And
at no time ... was there any consideration of any other school.”
Plaintiffs are also trying to get the court to reverse the Robertson Foundation’s decision to retain the
Princeton University Investment Company (PRINCO) to manage its investment portfolio, despite
the fact that the Certificate of Incorporation authorized that decision, and despite the fact that the
decision has proved to be a resounding success for the Foundation. [See: Question 34; Question 37]
Apparently as part of their strategy to recapture money previously given to Princeton so they can
control an even larger pool of assets themselves, the Robertson family members also claimed that
the Certificate of Incorporation limits spending by the Foundation to dividends and interest earned
by its endowment and prohibits the Foundation from spending realized capital gains. They took this
position notwithstanding the unambiguous language of the Certificate itself that permits such
spending, the adoption of the Uniform Management of Institutional Funds Act (“UMIFA”) in
Delaware and New Jersey that also unambiguously permits such spending, and the routine practice
of other managers of charitable corporations to include realized capital gains in spending decisions.
Plaintiffs ask that Princeton reimburse the Foundation for realized gains transferred to the
University since 1992. As described below, the court rejected these arguments, granting Princeton’s
motion for summary judgment on the issue. [See: Question 38; Question 39]
Finally, the Robertson family members challenge Foundation funding for certain aspects of the
Woodrow Wilson School graduate program, such as School research centers and summer salaries
for graduate school faculty. Because these family members disagree with the School’s
determination that such expenditures benefit the graduate program, they want the court to order
Princeton to refund these expenditures to the Foundation. [See: Question 30]
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14. Has the Robertson family always disapproved of the Woodrow Wilson School or the way
Princeton has used Foundation assets?
No. For most of the history of the Foundation, the family was very supportive of the Woodrow
Wilson School and of the University’s use of the Foundation’s assets. The vast majority of
decisions made by the Foundation in its 45 year history were made with the unanimous support of
the board—including Charles and/or William Robertson, who, between them, attended all of the
board meetings held in the past 45 years. (Between the time he was appointed to the Foundation
board and the time he filed suit against Princeton, William Robertson attended 28 board meetings
and more than 60 meetings of the Foundation’s Investment Committee.)
In 1977, for example, Charles Robertson wrote that he “never had cause for regret” that his wife
had provided support for the Woodrow Wilson School, which he described as “first rate” and
“doing an outstanding job.” [Document: Charles Robertson's January 8, 1977 Letter]
In January 1981, plaintiff William Robertson wrote that “The Woodrow Wilson School is the
leading educational institution in the world in the field of public and international affairs as a result
of (a) its fine faculty and student body and the administration by Princeton University and (b) the
great financial capability it possesses as a result of the Robertson Foundation gift by Marie and
Charles Robertson.”
Ten years later, in 1991, plaintiff William Robertson wrote: “… I have to say, [the Robertson
Foundation is] achieving the kinds of goals that Mom and Dad would have hoped for. The
Woodrow Wilson School continues to be the foremost school in public and international affairs in
the world.”
15. Is there any allegation that any University-designated trustee acted for his or her own
personal benefit?
No. There has never been any allegation whatsoever that any current or former Universitydesignated trustee ever derived a financial gain from service to the Robertson Foundation. (The
trustees are not even compensated for their service on the board.) Although plaintiffs and their
counsel frequently invoke the rhetoric of “fraud” and “theft,” there are no allegations that any
Foundation funds were ever diverted to any University-designated trustee or away from Princeton
University.
Foundation Control
16. Did the donor intend to give Princeton control over the Robertson Foundation?
Yes. As an incorporator of the Foundation, Mrs. Robertson gave Princeton control over the
Robertson Foundation in part to obtain the significant tax advantages that flowed from her
donation. In seeking a ruling from the Internal Revenue Service, Mrs. Robertson's and Princeton's
representatives emphasized that the gift to the Foundation should qualify for both income and gift
tax deductions because Mrs. Robertson was relinquishing control to a public charity and the gift
was ultimately “to or for the use of Princeton University” and the Foundation would be under
Princeton’s control. [Documents: President Goheen's May 1, 1961 Letter and Excerpt from the May
4, 1961 Myers Memorandum]
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Since its inception, Princeton’s control of the Robertson Foundation was established through
several provisions in the Certificate of Incorporation and bylaws. [Document: Excerpt from the
Foundation Bylaws] The Certificate provides that if the Foundation should be dissolved, the “Board
of Trustees shall distribute or transfer the property and funds of the corporation . . . to Princeton
University.” Only if Princeton University loses its section 501(c)(3) tax exemption, thereby ceasing
to be “an exempt organization,” can the Foundation’s assets be made available to another
beneficiary. [See: Question 3] [Document: Excerpt from the Foundation Certificate of
Incorporation]
For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law
firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as
litigation counsel to Princeton University and the individual defendants in the Robertson litigation.
17. Did the donor retain any control over the Robertson Foundation?
No. Princeton's control enabled Mrs. Robertson to enjoy income tax and gift tax benefits, which the
donor would not have enjoyed had she controlled the Foundation. Mrs. Robertson completely
relinquished any right to the assets she donated to the Foundation. The governance structure for the
Foundation provided that a majority of the positions on the board would be appointed by the
University and a minority of the positions on the board (three out of seven) would be appointed by
the Robertson family. This structure is consistent with the Foundation's status as a 509(a)(3)
supporting organization.
Mrs. Robertson’s husband, Charles, served as a trustee and president of the Foundation from its
creation in 1961 until his death in 1981. One of the current plaintiffs, her son William, joined the
board in 1974 and another, Robert Halligan, joined in 1982.
Foundation Tax Structure
18. What does it mean for the Robertson Foundation to be a “supporting organization”?
In 1969, Congress amended the Internal Revenue Code to add section 509, which classified
501(c)(3) exempt organizations into two categories: public charities and private foundations. By the
1969 amendment, Congress also created a new sub-category of public charities known as
“supporting organizations.” A “supporting organization” is “operated, supervised, or controlled by”
another public charity (a Type I supporting organization), “supervised or controlled in connection
with” another public charity (Type II) or “operated in connection with” another public charity
(Type III). According to the Internal Revenue Service: “The key feature of a supporting
organization is a strong relationship with an organization it supports. The strong relationship
enables the supported organization to oversee the operations of the supporting organization.”
[Document: Excerpt from IRS Website] There are approximately 45,000 supporting organizations
in the United States. [See: www.nptrust.org/philanthropy/philanthropy_stats.asp]
The Robertson Foundation is a Type I supporting organization, “operated, supervised, or controlled
by” Princeton. This means that by requirement and by design the Robertson Foundation exists
solely to support Princeton, and its governance structure is tightly bound up with Princeton
University.
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For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law
firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as
litigation counsel to Princeton University and the individual defendants in the Robertson litigation.
19. How did the Robertson Foundation become a supporting organization?
In 1970, following the enactment of the Tax Reform Act of 1969, the Robertson Foundation
requested classification as a public charity by reason of being a supporting organization controlled
by the University within the meaning of section 509(a)(3) of the Internal Revenue Code. In its
application to the IRS, the Foundation described its relationship to Princeton and in particular
Princeton’s “control” over the Foundation. Charles Robertson, the donor’s husband and president of
the Foundation, represented to the IRS that the Foundation should be classified as a “supporting
organization” of Princeton University because:
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the Foundation is “operated exclusively for the benefit of Princeton”
the Foundation is “controlled by Princeton”
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,” and
the Foundation is a public charity within the sub-category of supporting organizations, and
not a private foundation.
Charles Robertson’s representations to the government are available here: [Document: Excerpt
from Charles Robertson's August 20, 1970 Notification Concerning Foundation Status]. By letter
dated November 9, 1970, the IRS classified the Foundation as a public charity (i.e., “an
organization that is not a private foundation as defined in section 509(a) of the Internal Revenue
Code”). [Document: IRS Letter]
20. May the Robertson family control the Foundation?
No. The Internal Revenue Code imposes several requirements to ensure that a supporting
organization such as the Robertson Foundation is overseen by a public charity. In order to retain its
classification as a Type I supporting organization, the Robertson Foundation must be “operated,
supervised, or controlled by” Princeton University. As the Robertson family has understood for
more than 45 years, Princeton’s 4-3 majority on the board makes the Foundation compliant with
this requirement of federal law. In addition, Robertson family members are expressly prohibited
under federal tax law from controlling the supporting organization. As descendants of a contributor,
they are deemed “disqualified persons” under the tax code.
Role of Fiduciaries
21. Do the University-designated trustees have an inherent conflict of interest because of their
status as fiduciaries of Princeton and of the Robertson Foundation?
No. Plaintiffs are claiming that members of the Robertson board appointed by Princeton University
have an inherent and disabling conflict of interest solely because these individuals are also trustees
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or officers of the University. They make this claim despite being fully aware that the Robertson
Foundation explicitly is to be “operated exclusively for the benefit of Princeton,” as William
Robertson’s and Katherine Ernst’s father, Charles Robertson, personally confirmed to the IRS in
1970. [See: Question 19] They also are fully aware that federal tax law requires a supporting
organization like the Robertson Foundation to be controlled by its supported organization (in this
case Princeton University), and that the bylaws of the Foundation require that the Universitydesignated trustees include the president of the University and at least two other current or former
trustees of the University.
Plaintiffs are trying to persuade the court that this governance structure presents a conflict of
interest each and every time the University-designated trustees consider transactions such as
payments from the Robertson Foundation to the University—payments that are central to fulfilling
the charitable purpose of the Foundation. They argue that this “conflict” has existed during each
and every year and as to nearly each and every decision since the Foundation’s inception. They
argue that, because of this “inherent” conflict of interest, the University-designated trustees of the
Robertson Foundation must recuse themselves from voting on any transaction between the
Foundation and the University or otherwise satisfy what is known as the “entire fairness” test under
governing Delaware law. Under this test, the Robertson family-designated trustees could seek
review by the courts of every decision by the Foundation board with which they disagreed, and
require the University-designated trustees and the University to demonstrate the “entire fairness” of
every expenditure with no deference accorded to the “business judgment” of these trustees or the
University.
The close relationship between Princeton and the Robertson Foundation, which plaintiffs say
creates this so-called “conflict,” is by definition a feature of all Type I supporting organizations.
[See: Question 18; Question 19] Since the Robertson Foundation is a Type I supporting
organization under federal tax regulations, Princeton is required to control the Robertson
Foundation. This structure with these dual roles was explicitly agreed to by all parties at the time
the Foundation was incorporated. The donor’s husband, Charles Robertson, never objected to this
structure during his 20 years as an active member and president of the board; rather, Mr. Robertson
understood, accepted, and endorsed this structure year after year, as did all of the Robertson family
trustees for over 40 years until this litigation began in 2002.
Under their conflict of interest theory, the plaintiffs want the University-designated trustees to be
disqualified from decisions involving Princeton, and they want the Robertson family members to
control those decisions. In addition to contravening the requirement that supported organizations
must control their supporting organizations, this theory would contravene section 509(a)(3)(C) of
the Internal Revenue Code which provides that supporting organizations may not be controlled by
“disqualified persons”—including substantial contributors to a supporting organization and their
immediate family.
For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law
firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as
litigation counsel to Princeton University and the individual defendants in the Robertson litigation.
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Foundation Purposes
22. What does the Foundation’s Certificate of Incorporation say about the purpose of the
Robertson Foundation?
Paragraph 3 of the Certificate of Incorporation states that the purpose of the Robertson Foundation
is to “establish or maintain and support at Princeton University, and as part of the Woodrow Wilson
School, a Graduate School....” [Document: Foundation Certificate of Incorporation] From its
inception, the Woodrow Wilson School has always been a school of public and international affairs.
The Robertson gift allowed the School to significantly expand its graduate program.
The School has never been, and never considered becoming, a vocational school narrowly focused
on training students for specific positions or careers. The Certificate says that the Foundationsupported School will be a place “where men and women dedicated to public service may prepare
themselves for careers in government service with particular emphasis on the education of such
persons for careers in those areas of the Federal Government that are concerned with international
relations and affairs.” [Document: Foundation Certificate of Incorporation]
The Certificate states that the Foundation’s objective is to “strengthen the government of the United
States and increase its ability and determination to defend and extend freedom throughout the
world,” and that the Foundation will do this “by improving the facilities for the training and
education of men and women for government service” at the Woodrow Wilson School. The
Certificate allows Princeton to use funds from the Foundation not only to maintain and support the
graduate program of the Woodrow Wilson School but, specifically, to provide scholarship and
fellowship support for the School’s students and to provide “collateral and auxiliary services, plans
and programs” that support the School. It expressly contemplates, as well, that foreign students
would be educated in the Foundation-supported graduate program. [Document: Foundation
Certificate of Incorporation]
For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law
firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as
litigation counsel to Princeton University and the individual defendants in the Robertson litigation.
23. What, other than the Certificate of Incorporation, can define the Foundation’s purpose?
Paragraph 3 of the Certification of Incorporation is the only formal expression of purpose on which
the Foundation can act. Nothing else—including private correspondence within the donor’s family
or desires expressed by descendants of the donor—can redefine the Foundation’s purpose. The
Certificate represents a fundamental compact between the University and the donor, and the donor,
advised by legal counsel, understood that the purpose delineated in the Certificate would be the
only binding statement of intent for the Foundation.
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24. Did Princeton discuss the purposes of the Robertson Foundation with Mr. or Mrs.
Robertson?
Yes. Major gifts such as the one bestowed on Princeton by Marie Robertson represent vast
commitments not only by the donor, but also by the University. Princeton works extensively with
its donors to structure projects that fulfill the donor’s aspirations but also fit within the long-term
goals of the University, are consistent with its basic nature, and respect its academic judgments as
to how best to achieve those goals.
In the case of the Robertson gift, then-Princeton President Robert Goheen and Charles Robertson
had extensive conversations and exchanged substantive correspondence as the parameters of the
Robertson gift were designed. In two pages of typewritten notes that predated Marie Robertson’s
gift, Charles Robertson recommended that the School’s curriculum should “not [be] limited to areas
pertinent only to foreign service” and needed to include “an understanding of the problems and
aims of labor,” “a thorough knowledge of the history, political institutions, economy, etc. of the
U.S.,” and “the effect on policy of scientific … development.” [Document: Excerpt from Charles
Robertson's December 15, 1960 Notes]
25. What do the plaintiffs claim is the purpose of the Robertson Foundation?
Despite the clear language of the Certificate of Incorporation, and despite more than 40 years of
actions based upon it, plaintiffs want the court to believe that the beneficiary of Mrs. Robertson’s
gift is not the Robertson Foundation, Princeton University nor the graduate program at the
Woodrow Wilson School. According to them, the beneficiary of the gift is the United States
government. They base their argument on a fragment of a sentence in the Certificate that says the
“objective” of the Foundation is to “strengthen the government of the United States and increase its
ability and determination to defend and extend freedom throughout the world.” That sentence
immediately goes on to say that the Foundation is to do this “by improving the facilities for the
training and education of men and women for government service and to contribute, lend, pay over,
or assign the income of the corporation and/or the funds or property of the corporation … to or for
the use of Princeton University … to establish or maintain and support at Princeton University, and
as a part of the Woodrow Wilson School, a graduate school.” [See: Question 22]
In this litigation, plaintiffs proffer an exceedingly narrow interpretation of what the Certificate
authorizes, and claim that whether the Foundation is compliant with the Certificate of Incorporation
should be judged by the number of graduates it places directly into a limited range of U.S. federal
government jobs. In addition to being in conflict with the Foundation’s Certificate and its 46-year
history, plaintiffs’ view is anachronistic in its understanding of the federal government's needs and
its hiring and contracting practices.
As described by President Goheen, Princeton’s President when the Foundation was created, from
its inception the Foundation has aspired to “bring about the development of a whole new level of
post-graduate, professional education in the Woodrow Wilson School” amid “the changing
requirements of a shifting world.” [Document: Excerpt from the June 12, 1973 Remarks by
President Goheen] More recently, U.S. Secretary of State Condoleezza Rice commented: “As a
professor myself, I understand how important it is to root the practice of statecraft [and] the study
of statecraft in the systematic examination of politics and history and culture that the Wilson School
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offers to its students.” [Document: Excerpt from the September 30, 2005 Speech by Secretary
Condoleeza Rice]
26. In what ways does the Woodrow Wilson School carry out the purpose of the Robertson
Foundation?
Consistent with the Robertson Foundation’s purpose, the Woodrow Wilson School’s goal is to
enroll men and women dedicated to public service and provide them with knowledge and skills that
qualify them for leadership positions in government service, including specifically federal
government service in international relations, upon graduation or later in their careers. The School
superbly prepares its graduate students for government and other forms of public service, precisely
as the Certificate of Incorporation envisions.
Since the Robertson Foundation was founded, the Woodrow Wilson School curriculum has taken a
long-term approach, emphasizing fundamental analytic methods and intellectual breadth rather than
narrowly-targeted vocational training. By doing so, the School prepares students to deal not only
with the immediate policy challenges confronting the government when they graduate and enter
public service, but also with the very different, and often unanticipated, challenges that will await
them in future decades when they may assume major roles within the government.
The Woodrow Wilson School also prepares students for a world in which the boundaries between
international and domestic policy issues are increasedly intermingled. It prepares them to serve
within the government, but also in the vast array of non-governmental organizations and private
firms, such as CARE, World Vision, Save the Children and the Red Cross, that work with and for
the government and provide services that were once provided directly by government.
The ability of the government of the United States to defend and extend freedom throughout the
world today thus depends on effective leadership not only within the government, but within the
many organizations that collaborate with the government in carrying out its objectives. The School
advances the mission of the Foundation through its curriculum, its opportunities and requirements
for non-classroom learning (including internship programs), its career office, the quality of its
faculty and its research programs, and its outreach and communications activities.
27. Is Princeton’s conception of the Foundation’s purpose something new?
No. The catalogue, issued for academic year 1963-64, for operation of the expanded graduate
program, reports that the program:
includes both international and domestic affairs—indeed, the distinction here is increasingly
hard to draw for there are few ‘domestic’ activities without international implications, and
events abroad quickly make themselves felt internally.
Princeton’s conception of ‘public affairs’ is broad. Anyone whose decisions and actions
normally have important consequences for the public welfare is regarded as engaged in public
affairs, whether he is employed in the executive or legislative branches of government, and
whether his position is appointive or elective, civilian or military, or located in international,
national, state, or local fields of action. Clearly a definition of public affairs framed in these
terms also embraces some non-government activities, for example, certain types of work in
Page 13 of 31
journalism, in private foundations, and in business, labor and consumer organizations.
[Document: Woodrow Wilson School Catalogue for Academic Year 1963-1964]
28. Do Woodrow Wilson School graduate students enter government service?
Between 1973 and 2006, 72.5% of Masters in Public Affairs graduates from the Woodrow Wilson
School who took jobs chose employment in the public and non-profit sectors upon graduation. Over
that time period, 41.5% who took jobs went to work in government service (federal, state, local or
with foreign governments) and 27.3% who took jobs went to work for foundations or nonprofit and
international organizations. For the class that graduated in 2006, more than 88% of those who took
jobs chose employment in the public and non-profit sectors, including 50.9% in government service
and 33.9% with foundations or nonprofit and international organizations.
As impressive as these first job statistics are, they do not reflect the many graduates who go into
government service later in their careers, and the many others who work with government agencies
or engage in government-related activities in other ways.
Because statistics can only tell part of the story, the best evidence of the Woodrow Wilson School’s
success in fulfilling the Robertson Foundation’s purpose is its graduates. There are many stellar
examples. General David H. Petraeus, Chief of U.S. Central Command, received a Masters in
Public Affairs from the Woodrow Wilson School in 1985 and a doctorate from the Woodrow
Wilson School in 1987. Other graduates include former Assistant to the President for National
Security Anthony Lake (MPA ’69, PhD ’74), the National Security Council Director for Iran, the
Country Director for India, senior officials at the U.S. Department of Defense, and numerous
foreign service officers with the U.S. Department of State. More information on these and other
Woodrow Wilson School graduates can be found on the Woodrow Wilson School website. [See:
www.wws.princeton.edu/qzalumni/testimonials]
In addition, the Woodrow Wilson School has had great success in placing its graduate students in
the Presidential Management Fellows program. The PMF program is a primary gateway for
graduating MPA students to find jobs in the federal government. In 2004, at the urging of Woodrow
Wilson School Dean Anne-Marie Slaughter, the PMF program removed an applications cap that
previously allowed only ten percent of the graduating class of any given school to apply for the
program. In 2005, after the cap was lifted, more than half of the eligible students in the Woodrow
Wilson School MPA graduating class applied. Despite intense national competition, more than half
of the School’s applicants (16 out of 30) were selected.
29. What else do Woodrow Wilson School graduate students do after they graduate?
In addition to government service, a number of Woodrow Wilson School graduates have gone on to
senior positions in non-governmental and inter-governmental organizations, including the United
Nations, the Peace Corps, the World Bank, and the International Monetary Fund. For example,
Robert Orr (MPA ’92, PhD ’96) is currently serving as Assistant Secretary General of the United
Nations. Some students who pursue careers in the private sector end up working as government
contractors, in this country and overseas. Further, consistent with the provision in the Certificate of
Incorporation that specifically authorizes funding of “programs for foreign students,” the School’s
graduate programs have trained a number of foreign diplomats.
Page 14 of 31
30. What is the Scholars in the Nation’s Service initiative?
The new Scholars in the Nation’s Service initiative draws on Robertson Foundation funds and new
endowments from other donors to encourage exceptional college juniors and entering graduate
students to work in the federal government.
The program, modeled after the Rhodes and Marshall scholarships, seeks to raise the prestige of
government service among this generation of college students and encourage some of the very best
students to enter government service. The first five Scholars in the Nation’s Service were
announced in April 2007. These Princeton juniors will spend their remaining semesters in college
completing their majors, taking selected courses in public policy, learning about career
opportunities in the federal government, and spending the summer after their junior year in a
federal government internship. After graduation they will be known as Charles and Marie
Robertson Government Service Scholars and will serve for two years in the federal government.
They will then return to the Woodrow Wilson School to enroll in the two-year Masters in Public
Affairs (MPA) program.
31. Do the Robertson family members support the Scholars in the Nation’s Service initiative?
The Robertson family members voted in favor of creating the program, but in March 2006, when it
was first announced, plaintiff William Robertson dismissed it, saying he was “quite suspicious of
anything Princeton does....” More recently, Mr. Robertson has been quoted in support of the
program.
Academic Independence
32. In its discussions with Mr. and Mrs. Robertson, did Princeton discuss the fundamental
importance of preserving University control over academic judgments?
Yes. Princeton’s control over the Foundation was a key condition in Princeton’s acceptance of Mrs.
Robertson’s donation. In May 1961, Princeton President Robert Goheen submitted a letter to the
IRS in support of the favorable tax ruling sought by Mrs. Robertson in which he expressly noted the
importance of Princeton control over programs supported by the Foundation, as well as the
Foundation itself:
From the very inception of [Mrs. Robertson’s proposal], the prospective donor
has fully understood and agreed that the University must have the responsibility
for the direction, maintenance and operation of the School in all its aspects. . . .
[N]o university could plan so many permanent appointments to its faculty and
develop an expanded program of this magnitude unless both policy control and
continuous financial support for the program were assured to it.
Thus, there is no question but that the donor intends this gift to be for the sole
use of Princeton University. Indeed, the Trustees of Princeton University would
not have agreed to accept this gift, and authorized this most important and
greatly expanded program of post-graduate instruction for the public service, if
they had not been advised and believed that the University controlled the
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Foundation through its majority representation. [Document: Excerpt from
President Goheen's May 1, 1961 Letter]
33. Are plaintiffs challenging Princeton’s academic judgments in this litigation?
Yes. They have sought to substitute their judgment for the judgment of the educators at Princeton
and the Woodrow Wilson School with respect to how Foundation funds should be used to prepare
students for careers in government and public affairs. For example:

Each year, the School makes a number of lecturer appointments to several leading public
policy practitioners. Recent practitioner appointments include Joschka Fischer, former
Foreign Minister of Germany and one of the most influential policy leaders in Europe;
Frederick Hitz, former CIA inspector general; and Ambassador Robert Hutchings, former
chairman of the U.S. National Intelligence Council and former director for European
Affairs at the National Security Council. In 2004 Dean Slaughter created a program to
bring ambassador-level career U.S. diplomats to the School each year to teach courses on
international security and diplomacy and to provide career counseling to students
interested in working for the State Department. This year, the School appointed
Ambassador Richard Erdman, a career foreign service officer with 34 years of experience
with the State Department, and recently U.S. Ambassador to Algeria and Special
Envoy/Chairman of the Israel Lebanon Monitoring Group, as a Diplomat-in-Residence.
Next fall, Ambassador Barbara Bodine, former Ambassador to Yemen and Deputy Chief
of Mission in both Baghdad and Kuwait, will begin her teaching duties as a Diplomat-inResidence.
Plaintiffs nonetheless complain that the Woodrow Wilson School does not hire enough
government affairs practitioners. Princeton and the Woodrow Wilson School believe that
practitioners play an important role, but central to the School’s eminence and success is its
world class faculty. Students come to the School because of its leading scholars and
teachers and governments recruit the School’s students because of the education this
faculty provides.

The School has always had a small number of sole appointments (i.e., appointment solely
to the Woodrow Wilson School). The current faculty includes, most notably, Robert
Keohane, considered by many to be the most respected international relations scholar of
his generation; Frank von Hippel, a distinguished physicist and arms control expert; and
Denise Mauzerall, an atmospheric chemist who is one of the world’s leading authorities on
air pollution. For most of the faculty, however, Princeton and the School believe that “joint
appointments” (i.e., appointment jointly to the Woodrow Wilson School and to another
department) enable the School to build a multidisciplinary faculty that is drawn from the
fields of economics, law, political science, psychology, sociology, demography, history
and the natural sciences. The knowledge and skills required to produce well-trained public
servants cut across disciplinary lines.
Plaintiffs want more of the faculty of the School to be composed of professors appointed
solely to the School. But the School’s ability to appoint public policy-oriented faculty
whose appointments are both in the School and in a related discipline allows the School to
Page 16 of 31
provide a curriculum that extends across these disciplines and to attract the very best
students and faculty. Recent faculty additions that would not have been possible without
joint appointments include John Ikenberry, a renowned specialist in U.S. foreign policy
and geopolitics; Thomas Christensen, a leading expert on China and Asian security studies
who was recently appointed as Deputy Assistant Secretary for East Asian and Pacific
Affairs; and Nobel Laureate Daniel Kahneman, expert in behavioral economics.

Plaintiffs contend that research centers do not further the educational mission of the
Robertson Foundation and, therefore, do not want the Foundation to support such centers.
Princeton and the Woodrow Wilson School believe that research centers are essential to
faculty recruitment and directly contribute to the preparation, education and training of
future leaders in government and public affairs. [See: Question 41]
Interestingly, when then-Secretary of State Colin Powell spoke at Princeton in 2004 and
was asked to identify the major dangers facing the world, many of the examples he gave
(“ignorance, a lack of law, poverty, disease, a failure to believe in democracy”) are topics
addressed by the School’s research centers (e.g., the Office of Population Research and the
Center for Health and Wellbeing, which focus on issues of poverty, disease and
international public health, the Center for the Study of Democratic Politics, which focuses
particularly on the relationship between democratic ideals and democratic practice, and the
Program in Law and Public Affairs, which explores the role of law in constituting
democratic politics and societies). Solving these crises, Secretary Powell said, “is the
essence of my work and my foreign policy.” [Document: Excerpt from the February 20,
2004 Speech by Secretary Colin Powell]
Appointment of PRINCO
34. What is PRINCO?
Princeton University Investment Company (PRINCO) is a part of Princeton University. It is
responsible for the management of the University’s endowment. PRINCO was recently named the
2006 Endowment of the Year for its continued excellence in investment management. [Document:
October 24, 2006 Press Release]
For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law
firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as
litigation counsel to Princeton University and the individual defendants in the Robertson litigation.
35. Why did the Robertson Foundation vote to engage PRINCO as its portfolio manager for
the Foundation?
For more than twenty years, beginning with its formation in 1978, the Robertson Foundation’s
three-member, volunteer Investment Committee chose investment managers and directly supervised
their performance. Around 1998, the two members of the Investment Committee with professional
experience in investing, John Beck and Jay Sherrerd, began to express concern about the
Foundation continuing to rely entirely upon a part-time volunteer committee to manage what was
Page 17 of 31
then a $500-$600 million endowment in an investment environment containing significant new
asset categories and new complexities in the capital markets. Mr. Sherrerd believed that the
investing “world had changed” and a “volunteer committee on a part-time basis” would be unable
without assistance to make the “kind of decisions that really should be made” in managing the
Foundation’s endowment.
Based on their own professional experience, their familiarity with the field of institutional investing
and their knowledge of PRINCO, Messrs. Beck and Sherrerd both believed that the Foundation
should retain PRINCO to invest the Foundation’s assets side-by-side with the University’s
endowment, subject to continued oversight by the Investment Committee. They believed that the
retention of PRINCO would enable the Foundation to avail itself of a greater diversity of
investment opportunities and a level of managerial expertise and quality of service than would be
available from any other portfolio manager at a comparable cost.
William Robertson opposed PRINCO’s engagement from the outset. He threatened to sue his
fellow trustees and the University, and indeed he did sue the University in July 2002, a few weeks
after the Board voted to authorize the Investment Committee to review and consider other potential
firms to oversee management of the Foundation’s assets. Nonetheless, the Investment Committee
thoroughly considered numerous alternatives to PRINCO, including specific managers proposed by
Mr. Robertson. After this review, the Investment Committee concluded that PRINCO was the most
cost-effective and appropriate manager for the Foundation’s funds. In November 2003, the
Foundation board voted 4-3 to retain PRINCO to advise the Investment Committee and manage the
assets of the Robertson Foundation, subject to the continued oversight of the Investment Committee
and the Robertson Foundation board.
36. Why did the Robertson trustees vote against the PRINCO appointment?
The Robertson family trustees all voted against the appointment. As litigation plaintiffs, the
Robertson trustees allege that the PRINCO selection process was a “sham.” The decision to select
PRINCO, however, was undertaken on the initial recommendation of Foundation trustees who were
very experienced investment professionals and only after a careful, thorough, and year-long review
of thirteen alternatives to PRINCO by the Robertson Foundation Investment Committee.
Plaintiffs also claim that the Robertson Foundation’s decision to retain PRINCO to provide
investment management services under the continued oversight of the Foundation’s Investment
Committee constituted a breach of the board’s duty of care and/or duty of loyalty. However, the
evidentiary record demonstrates that the board’s decision to retain PRINCO was reasonable and in
accordance with the board’s duties of care, loyalty and good faith. In the 31⁄4 years since PRINCO
was appointed, the value of the Foundation’s assets have increased by more than $250 million.
This is not the first time the Foundation has delegated responsibility for the management of its
assets to Princeton University. Prior to 1978, the Foundation—with the support of Charles
Robertson—delegated responsibility for management of the Robertson portfolio to the Princeton
University Investment Committee.
Page 18 of 31
37. What has happened to the Foundation’s assets since engaging PRINCO?
The market value of the Robertson Foundation assets in January 2004, when PRINCO took
responsibility for the Foundation’s investment portfolio, was $561 million. At the end of December
2007—after four full years of PRINCO management—the net market value exceeded $900 million,
after annual withdrawals of $20 million to $32 million for programmatic and capital expenditures.
Because of the superior results PRINCO has been able to achieve for the University and the
Robertson Foundation, PRINCO was named the 2006 Endowment of the Year for its continued
excellence in investment management. [Document: October 24, 2006 Press Release]
When the Foundation’s Investment Committee was established in 1978, the Foundation’s
endowment was just under $34 million, reflecting the fact that essentially all of the earnings on the
original $35 million gift had been spent. Between 1978 and January 2004, the value of the
endowment rose from $34 million to $516 million, and as of June 30, 2008, the endowment is
valued at more than $900 million. At the same time, between 1978 and 2007 the Foundation has
contributed more than $330 million in operating and capital expenditures to expand and support the
graduate program of the Woodrow Wilson School. This record of accomplishment reflects a
longstanding and continuing commitment to skillful investment and prudent management led by
University-appointed members of the Foundation and, since 2004, supported by PRINCO.
Capital Gains Spending
38. What does the Certificate of Incorporation say about the Robertson Foundation’s ability
to spend realized capital gains?
Article 11(c) of the Foundation’s Certificate of Incorporation imposes limitations on the
disbursement of capital assets “which do not constitute income or accumulated income as defined
in Treasury Department Regulation § 1.504-1(c), or its then equivalent” but it does not restrict the
expenditure of income. [Document: Excerpt from the Foundation Certificate of Incorporation]
In 1961, Treasury Regulation § 1.504-1(c) defined “income” as “gains, profits, and income
determined under the principles applicable in determining the earnings and profits of a
corporation.” [Document: Excerpt from Treasury Regulation § 1.504-1(c)] In 1961 (and today),
“earnings and profits” included gains realized upon the sale of an asset. Thus, for purposes of
Article 11(c), “income”—as defined in the Treasury Regulation expressly referenced in Article
11(c)—includes realized gains and does not restrict their expenditure in any respect.
For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law
firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as
litigation counsel to Princeton University and the individual defendants in the Robertson litigation.
39. Does the law have anything to say about the expenditure of realized gains?
The Robertson Foundation is incorporated in Delaware and Delaware’s Uniform Management of
Institutional Funds Act, or “UMIFA,” authorizes expenditure of the Foundation’s realized capital
gains. UMIFA was enacted over thirty years ago with retroactive effect. It was enacted to reverse
Page 19 of 31
the adverse effects of outmoded, self-imposed spending limitations often practiced by public
charities (including educational institutions), such as those that plaintiffs want to re-impose here.
UMIFA expressly provides the trustees of an endowment fund with authority to spend the realized
and unrealized capital appreciation of the fund. UMIFA provides for an exception to this rule if the
gift instrument expressly states the donor’s intent to prohibit the expenditure of capital gains, but
there is no such prohibition in the Robertson Foundation’s “gift instrument,” the Certificate of
Incorporation. (While New Jersey law does not apply on this matter, New Jersey’s UMIFA includes
the same provision as Delaware’s.)
40. Why do the Robertson family members object to spending realized capital gains?
It is not clear why the Robertson family members objected to the expenditure of realized capital
gains. Since 1992, the Foundation has regularly spent dividend and interest income and a portion of
its capital gains realized from the sale of Foundation assets, consistent with the Certificate of
Incorporation and UMIFA. Each year, the Foundation board members—including plaintiffs
William Robertson and Robert Halligan—were given the Foundation’s financial statements that
clearly reflected that the Foundation was spending dividend and interest income and a portion of its
capital gains. At no point until shortly before the filing of the lawsuit did plaintiffs ever question or
object to the spending of a portion of the Foundation’s capital gains.
In a motion for summary judgment, Princeton asked the court to rule that, contrary to assertions
made by the Robertson plaintiffs, the plain language of Article 11(c) of the Foundation’s Certificate
of Incorporation permits the spending of capital gains and appreciation. In addition, the Delaware
Uniform Management of Institutional Funds Act (“UMIFA”), which governs the Foundation, also
makes clear that gains on the sale of Robertson Foundation assets may be expended in support of
the Foundation’s mission. [See: Question 38 and Question 39] In a detailed ruling on this issue in
October of 2007, Judge Shuster rejected every argument advanced by the Robertson plaintiffs,
siding with Princeton on every point. [See Question 50]
Use of Funds
41. How does Princeton use Robertson Foundation funds?
In large part, the process by which the Foundation provides support to Princeton has been in place
for more than 40 years. [See Question 9 for a discussion of the improvements that have taken place
since 2002.]
First, the Woodrow Wilson School makes academic judgments about how best to develop a
curriculum for its graduate program, attract and retain faculty and recruit graduate students. The
School then determines the costs of the graduate program, which initially are paid for by the
University, not the Foundation.
Under this procedure, the Foundation does not contribute any funds toward these costs as they are
actually incurred. Rather, the University directly funds all of the School’s expenses throughout the
fiscal year. After the end of the fiscal year the University obtains reimbursement for the
Foundation’s share of the costs through what is known as an annual “settlement” process. The
Foundation’s share is calculated according to an agreed-upon formula (initially the “Bowen
Page 20 of 31
Formula,” now the “Slaughter Formula”). In this “settlement” process, Princeton presents the
Foundation board with written reports from the Woodrow Wilson School dean detailing the
School’s programmatic activities, a dean’s report on School expenditures, and a report by the
Foundation treasurer. In addition, the University presents the Foundation board with financial tables
that detail total annual expenditures for faculty instruction, research, student fellowships, staff,
overhead or indirect costs, and other costs, as well as a breakdown of “credits” owed by the
University to the Foundation (credits that cover, for example, costs attributable to the
undergraduate program, which is not funded by the Robertson Foundation). Only after the
settlement materials are presented are Foundation funds transferred to Princeton to reimburse the
University for the Foundation’s share of the costs of the graduate program.
Over the past 45 years, Princeton University has used Foundation funds to provide the most
generous financial support in the country for outstanding graduate students, hire and support a
distinguished faculty, create research centers and programs that serve both to recruit and retain
faculty and to create intellectual communities and opportunities for more specialized study for
faculty and students, administer outreach and placement programs, and construct buildings to
accommodate the steadily expanding range of School activity. [See:
http://www.princeton.edu/~oktour/virtualtour/english/Stop03.htm] The result of all this investment
is not only a preeminent graduate program that prepares its graduates for leadership positions in the
federal government in particular and the public sector in general, but also a genuine leader in public
policy education, a School that is constantly innovating, experimenting and looking for ways to
train the future public leaders in both government and quasi-governmental organizations.
42. Does the Robertson Foundation pay for University “overhead” and administrative costs
related to the graduate program of the Woodrow Wilson School?
Yes. From the beginning, the Foundation realized that calculating the actual cost of the School’s
expanded graduate program on a dollar-for-dollar basis, year in and year out, would be impossible.
As a result, the Foundation looked to a formula designed to approximate the portion of the
Woodrow Wilson School’s total costs for which the Foundation should be responsible. The
defining principle of this formula, which was in place for 40 years, was articulated by University
President William Bowen:
Because the School is an integral component of the University, sharing the time
of faculty members with other departments and sharing facilities and supporting
services with all of the other components of the University, a straightforward
system of direct charges for all School activities is impossible; the need to
allocate joint costs cannot be avoided, and any such allocation is inevitably
somewhat arbitrary. Hence, what we are seeking is a fair approximation of the
true costs involved in the expansion of the School’s graduate program.
The so-called “Bowen Formula” operated through a series of annual charges and offsetting credits
that, taken together, were designed to achieve a “fair approximation” of the cost of the expanded
graduate program. This formula was vetted with the Foundation board at the time of its
implementation and applied by the University and accepted by the Robertson family trustees for
more than 40 years before this litigation began.
Page 21 of 31
Plaintiffs have focused on the Bowen Formula’s charges without acknowledging its many offsetting
credits and have distorted the application of the formula in various ways. Princeton has worked
hard to make sure that the Robertson Foundation is charged its fair share of the expenses of the
Woodrow Wilson School’s graduate program, and no more.
43. Haven’t plaintiffs raised questions about the Foundation’s spending?
The Robertson family members make a series of claims concerning alleged misspending by
Princeton of Robertson Foundation assets over the past 45 years. They claim that Foundation
support for Princeton’s expenditures on Woodrow Wilson School faculty summer salaries, faculty
research, research centers, capital construction, administration, and overhead (to name a few) is
improper.
The Robertson family members’ view on spending is colored by their overly restrictive
interpretation of the “mission” of the Foundation. [See: Question 25] For example:
 Plaintiffs seek to limit the use of Foundation funds to support summer research salaries for
Woodrow Wilson School faculty members. Plaintiffs’ approach is unduly narrow and at
odds with the historical and current view of the importance of summer salary funding. The
Foundation has supported summer salaries from its earliest days. Plaintiffs ignore the
continuing broad benefits that the Woodrow Wilson School graduate program receives
from faculty research, as well as its role in recruiting and retaining preeminent faculty
members. A 2005 report by Joseph Nye, Jr., former dean of Harvard’s Kennedy School of
Government, who is serving as an expert witness for Princeton in the litigation, states that
“[r]esearch funding, including summer salaries to support research, is an essential
component of the formula for success” for a public policy graduate school.

Plaintiffs claim that they are entitled to more than $16 million in accumulated equipment
depreciation charges dating back to 1965 because the University allegedly “double
charged” the Foundation for both direct equipment purchases and indirect equipment
depreciation costs. Plaintiffs admit that they cannot establish that this alleged double
charge occurred during most of the years during that period. Until 1985, all basic
equipment was paid for by the University; indeed, only two “extraordinary” equipment
purchases—totaling less than $140,000—were charged to the Foundation, and those
charges were disclosed to the Foundation’s board. Even after 1985, many Woodrow
Wilson School equipment costs were borne by the University rather than the Foundation.

Plaintiffs claim that every dollar of Foundation money directed to School-affiliated
research centers and individual faculty research accounts from fiscal year 1993 onward
was improper and should be repaid. Plaintiffs make this argument without analyzing the
purposes and specific use of these funds. The Robertson Foundation has partially funded
School-affiliated research centers for decades without complaint from the Robertson
family members. From 1980 to 2000, the financial tables presented to the Foundation
board disclosed $10 million (only a small part of the total costs of the School-affiliated
research centers) in Foundation support for faculty research, professional research staff,
and faculty non-program research. There was no objection by any member of the
Foundation board to any of these expenditures. These research centers contribute in a
meaningful way to the environment of the School, encouraging critical thinking and
Page 22 of 31
helping make the School vibrant and relevant. As Robertson-designated trustee General
Goodpaster recognized: research “bring[s] and keep[s] faculty and students at the frontiers
of understanding and knowledge in the field, and [provides] thorough, honest and scholarly
studies of past policy cases and of some continuing policy problems. To get and keep the
outstanding faculty required, such research would seem to be essential.”
In claiming that Princeton has “overcharged” the Foundation (for spending that the Robertson
family admits went to Princeton and the Woodrow Wilson School), plaintiffs fail to take full
account of a long-established series of annual charges and credits between the University and the
Foundation which have been in place since the Bowen Formula was adopted 40 years ago. [See:
Question 30]
In addition, plaintiffs choose to ignore the fact that Princeton’s use of Foundation funds has been
regularly reviewed by Robertson family representatives. Prior to the filing of the lawsuit, none of
the family-designated Foundation trustees ever objected to these expenditures. Plaintiffs William
Robertson and Robert Halligan, who have served on the Foundation’s board since 1974 and 1982,
respectively, at no point ever objected to any of the financial statements or dean’s reports presented
in the course of the Foundation’s annual meetings, or to any of the Foundation funding that they
now attack in this litigation.
By asking for legally unsupportable “present-valued damages” on expenditures that are in some
cases four decades old, plaintiffs not only make claims that lack merit, but grossly overstate and
misrepresent the true value of their claims. For example, the plaintiffs claim that the Foundation
was charged both for the purchase of certain equipment and for equipment depreciation, and that
this represented an improper “double-charge.” The total amount paid by the Foundation in direct
equipment costs was $1.5 million, yet plaintiffs want to recover over $16 million for these
charges—an amount they calculate by annually compounding supposed charges over 40 years,
often using the Foundation’s exceptional rate of investment return to do so. Under plaintiffs’
arithmetic, an equipment depreciation charge of $10,763 in 1965 is extrapolated into a current day
“overcharge” of $788,175, and a challenged charge of $23,315 in “building depreciation” in 1966
becomes a $1,708,598 claim in the litigation.
Princeton takes its obligations to the Foundation seriously. Not surprisingly, when combing through
45 years of Foundation records to respond to plaintiffs’ scorched earth litigation campaign,
Princeton identified a limited number of bookkeeping and related inconsistencies and has made
corrective adjustments.
44. Why did Princeton reimburse the Foundation for the Graduate Funding Agreement?
In March 2007, Princeton announced that it would reimburse the Robertson Foundation for the
relatively modest cost of a program called the Graduate Funding Agreement (“GFA”).
The GFA was a pilot program between 2000 and 2002 that was established by former Woodrow
Wilson School Dean Michael Rothschild to support Ph.D. students in three academic departments
closely related to the Wilson School—economics, politics, and sociology—for the purpose of
attracting and retaining excellent faculty in the School. By virtue of its design to support the
Woodrow Wilson School, the GFA program was a permissible expenditure for the Robertson
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Foundation under its Certificate of Incorporation. In 2002, at the conclusion of its three-year trial,
the agreement was discontinued by the current dean, Anne-Marie Slaughter.
During the most recent annual budget reconciliation, President Tilghman determined that the
inception of the GFA pilot program had not met appropriate standards of transparency. The funding
of the program should have been specifically presented to the Foundation because, although in
support of the School’s graduate program, the funds were not direct expenditures through the
Woodrow Wilson School. Princeton’s voluntary decision to return $782,375 to the Foundation was
an affirmation by the University of its commitment to sound governance practices for the
Foundation and of its willingness to take corrective action when it finds that such practices have not
been followed.
Banbury Fund
45. How are plaintiffs funding this lawsuit against Princeton?
The Robertson descendants are funding their lawsuit and a related publicity campaign through the
Banbury Fund, a private charitable foundation controlled by the Robertson family.
The Banbury Fund’s 990-PF information returns show that, through calendar year 2006 (the most
recent publicly available return), the Fund had disbursed nearly $23 million for this litigation,
including expenditures for “legal services,” “accounting” and “public relations.” These
expenditures were in addition to salary payments to plaintiff William Robertson and stipends for
spouses of certain Robertson family members. If plaintiffs have continued their pace of
expenditure, the total amount of Banbury Fund resources spent on the litigation to date may exceed
$28 million.
Between the end of 2001 and the end of 2006, Banbury Fund assets fell from almost $49 million to
approximately $20 million. By drawing down the private foundation assets of the Banbury Fund,
the Robertson family members have been able to finance a “scorched earth” approach to evidence
gathering in this case, which has dramatically escalated the cost to Princeton of defending the
lawsuit and dramatically reduced the amount of money that otherwise could have been expended
for charitable grants by the Banbury Fund.
For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law
firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as
litigation counsel to Princeton University and the individual defendants in the Robertson litigation.
46. Is funding the litigation through a private charitable foundation appropriate?
Since the Banbury Fund’s resources are supposed to be supporting charitable purposes, the
Robertson family’s use of the Banbury Fund to support their legal and public relations expenses
associated with this litigation, including their personal claims, raises serious questions about what
might happen to Robertson Foundation assets if, as plaintiffs demand in this litigation, the
Robertson Foundation were converted into a private foundation under the Robertson family’s
control.
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The use of the Fund in this manner highlights issues in self-dealing that have become leading policy
concerns for the IRS and for the congressional tax-writing committees. IRS regulations state that “if
a private foundation makes a grant or other payment which satisfies the legal obligation of a
disqualified person, such grant or payment shall ordinarily constitute an act of self-dealing.” In this
situation, William Robertson and other members of the Robertson family are disqualified persons
because they are descendants of Mrs. Robertson, the donor and, therefore, the Banbury Fund may
not fund their litigation expenses. (The only exception that might apply is one for “incidental or
tenuous benefits,” which could not reasonably apply to expenditures that likely will extend well
past $25 million.)
Litigation Status
47. What is the current status of the litigation?
On Dec. 12, 2008, Superior Court Judge Maria M. Sypek approved a settlement agreement signed
Dec. 9, 2008, by the two parties to end the lawsuit. Judge Sypek's final judgment dismissed all
claims and counterclaims arising from the litigation, and ordered plaintiffs and the University to
consummate the agreement in accordance with the terms of the settlement, which includes the
dissolution of the Robertson Foundation.
On August 1, 2008, Judge Sypek had scheduled a trial date of January 20, 2009, but with the
approval of the settlement agreement, there will be no trial.
Judge Sypek was appointed successor to Superior Court Judge Neil H. Shuster, who retired from
the bench effective March 1, 2008. On September 24, 2008, the Assignment Judge in Mercer
County, Judge Linda R. Feinberg, informed the parties that Judge John Fratto would preside over
the trial, but Judge Sypek remained the presiding judge in the pretrial phase of the case.
Prior to the settlement, the previous key action in the case was the October 25, 2007, rulings by
Superior Court Judge Neil H. Shuster on several motions for partial summary judgment that
Princeton and plaintiffs filed in 2006. The summary judgment decisions issued by Judge Shuster
are described in more detail in the next section of this website.
The summary judgment decisions issued by Judge Shuster are described in more detail in questions
48-53 below. See:
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What summary judgment motions did the parties file?
What was Princeton’s “Sole Beneficiary” motion? How did the court rule?
What was Princeton’s “Capital Gains” or “Article 11(c)” motion? How did the court rule?
What was Princeton’s PRINCO motion? How did the court rule?
What was Princeton’s “laches” motion? How did the court rule?
What was the Robertsons’ “fiduciary duties” motion? How did the court rule?
After the summary judgment motions were decided, Judge Shuster determined that there were
contested issues to be resolved at trial; hence, preparations continued toward trial until the
settlement agreement was reached.
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Summary Judgments
48. What summary judgment motions did the parties file?
In 2006, Princeton and plaintiffs each filed several motions for partial summary judgment.
Princeton asked the court to rule on five issues that would materially advance resolution of the
litigation: (1) that Princeton is and will continue to be the sole beneficiary of the Robertson
Foundation, as clearly stated in the Certificate of Incorporation; (2) that Article 11(c) of the
Foundation’s Certificate of Incorporation does not limit the type of investment income that the
Foundation may spend; (3) that the Foundation properly selected and retained PRINCO as its
investment manager; (4) that certain of plaintiffs’ claims are too stale to be heard by the court
because they fall beyond the applicable laches or limitations period; and (5) that plaintiffs’ demand
that fact issues in this litigation be decided by a jury, rather than the court, was improper.
Plaintiffs filed two motions for partial summary judgment. In their first motion, they asked the
court to overturn the governance structure of the Foundation (and, by extension, the governance
structures of other supporting organizations around the country), which provides for majority
representation on the Foundation board for Princeton as the supported organization. (Princeton
designates four of the seven members; the Robertson family designates the other three.) In their
second motion, plaintiffs asked the court to determine that Princeton had “overcharged” the
Robertson Foundation in certain specific spending categories, including, for example, by paying for
faculty research, supporting WWS graduate school-based research centers, and constructing
buildings that plaintiffs claim do not house WWS graduate program activities.
49. What was Princeton’s “Sole Beneficiary” motion? How did the court rule?
In their complaint against Princeton, plaintiffs asked the court to amend the Foundation’s
Certificate of Incorporation and Bylaws to remove the University from any control or involvement
with the Foundation and to remove the University from its position of being the sole charitable
organization that can be supported by the Foundation. [See: Question 13]
Princeton asked the court to rule that this effort by Mrs. Robertson’s descendants to sever the
relationship between the University and the Foundation is contrary to the unambiguous terms of the
Foundation’s governing documents and contrary to applicable law. [See: Question 16]
Judge Shuster found that “Article 3 of the Foundation’s Certificate of Incorporation is clear and
unambiguous as to the University being the sole institution to which Foundation funds are to be
directed.” He denied the motion for summary judgment, however, holding that as a court of equity,
he should not “foreclose an equitable remedy prior to having the full facts,” i.e., until after a trial.
The court cautioned that the relief sought by the plaintiffs is “only... appropriate to remedy the most
egregious and nefarious of circumstances” and noted that “before this Court ordains a particular
type of relief, it should have the full facts before it.”
Addressing plaintiffs’ argument that the equitable doctrines of cy pres and deviation should apply
to permit a redirection of the assets of the Foundation, the court again declined to rule at this time,
but expressed reservations about whether the doctrines could be applied to the Robertson
Page 26 of 31
Foundation as a matter of law. Judge Shuster also expressed reservations about whether the
Robertsons could prevail on these doctrines even if they could be applied here, declaring that the
court “is not satisfied, at this stage in the litigation, that there has been a sufficient showing of a
legal or practical impediment to the accomplishment of the Foundation’s mission as set forth in the
Foundation’s Certificate of Incorporation.”
50. What was Princeton’s “Capital Gains” or “Article 11(c)” motion? How did the court rule?
In an effort to limit the amount of Robertson Foundation assets that can be used at the Woodrow
Wilson School, Mrs. Robertson’s descendants have argued that the Foundation’s expenditures
should be restricted to dividends and interest earned in its investment portfolio. [See: Question 13
and Question 40]
In the “Article 11(c)” summary judgment motion, Princeton asked the court to rule that, contrary to
assertions made by the Robertson plaintiffs, the plain language of Article 11(c) of the Foundation’s
Certificate of Incorporation permits the spending of capital gains and appreciation. In addition, the
Delaware Uniform Management of Institutional Funds Act (“UMIFA”), which governs the
Foundation, also makes clear that gains on the sale of Robertson Foundation assets may be
expended in support of the Foundation’s mission. [See: Question 38 and Question 39]
In a detailed ruling, the court rejected every argument advanced by the Robertson plaintiffs, siding
with Princeton on every point. Although plaintiffs had attempted to cloud the issues by relying on
complex and irrelevant tax issues, the court refused to be “lure[d]” into the “usual tax melange.”
Based on a review of the amended Certificate of Incorporation and the cross-referenced tax
provisions, the court determined that for purposes of Article 11(c), “income” includes realized
gains and Article 11(c) does not restrict their expenditure in any respect. The court found “there to
be no ‘genuine issue of material fact’ on whether Article 11(c) authorizes the spending of realized
gains.” Further, the court agreed with Princeton that UMIFA, which governs spending by non-profit
organizations, also authorizes the Foundation to spend realized gains.
As a result of this decision affirming the Foundation’s spending practices, the Foundation’s
spending is not limited to dividends and interest. Rather, consistent with modern investing and
spending principles, the Foundation may properly spend realized gains on the Foundation’s
invested assets.
51. What was Princeton’s PRINCO motion? How did the court rule?
The Robertson Foundation’s Certificate of Incorporation enables the Foundation to invest in
securities and property and, in furtherance of such powers, to retain investment managers. In their
complaint, Mrs. Robertson’s descendants have argued that the Foundation board breached its
fiduciary duties to the Foundation by selecting PRINCO as an investment manager. [See: Question
13 and Question 36] In its PRINCO motion for summary judgment, the University asked the court
to find as matter of law that the decision by the Foundation board to retain PRINCO as an
additional layer of investment management under the supervision of the Foundation’s investment
committee was a valid exercise of the Foundation’s business judgment. [See: Question 35 and
Question 37]
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In the court’s PRINCO decision, Judge Shuster rejected as having “no basis” plaintiffs’ assertion
that defendants had a disqualifying conflict of interest that prevented application of the “business
judgment rule” which provides for judicial deference to trustee decision making. Instead, he
concluded that the court should and would defer to the business judgment of the Universitydesignated trustees “unless Plaintiffs can show that Defendants violated their duties of care, loyalty,
and good faith.” In this connection, Judge Shuster concluded his opinion by noting: “While it may
well be that Defendants [Princeton] will ultimately succeed on the merits of the issue, the factual
setting presented precludes summary judgment.”
At trial, Princeton will present testimony proving that the decision to retain PRINCO was a result of
sound financial judgment. Moreover, the trial will demonstrate that the Robertson Foundation has
flourished under PRINCO. As Princeton noted in its motion papers, PRINCO offered the
Foundation access to more diverse investment opportunities and a professional level of managerial
expertise that would not otherwise have been available at a comparable cost. The Foundation’s
corpus, valued at $561 million when the Foundation retained PRINCO in 2004, is now worth over
$900 million—even after providing $20 to $32 million annually to support the Woodrow Wilson
School graduate program during the same period.
52. What was Princeton’s “laches” motion? How did the court rule?
Princeton asked the court to rule that some claims raised by Mrs. Robertson’s descendants are
simply too stale to be heard by the court. Princeton argued that certain categories of expenditures
that were made before 1996 were plainly known, or with the exercise of reasonable diligence
should have been known, to the plaintiffs and yet went unquestioned by them for decades prior to
the filing of this lawsuit. [See: Question 14] Accordingly, Princeton asked the court to preclude
review of all expenditures that fall beyond New Jersey’s six-year statute of limitations and laches
period (doctrines that preclude judicial review of older claims).
Many of plaintiffs’ claims challenged expenditures that were made by the Foundation decades ago,
some as early as 1965. While it has not admitted to any misspending, Princeton argued that the
plaintiffs’ claims related to five categories of these expenditures should be dismissed because
plaintiffs’ “unreasonable” delay is unjustified and has substantially prejudiced the University’s
ability to litigate the claims, as key witnesses are deceased and key records are no longer available.
Moreover, plaintiffs William Robertson and Robert Halligan have served on the Foundation board
since 1974 and 1982, respectively, yet did not object to the Foundation’s spending until filing their
lawsuit in 2002.
The court rejected plaintiffs’ legal argument that the doctrine of laches should not be applied to
charities, such as Princeton and the Foundation, or to confidential or fiduciary relationships. The
court then examined the record before it to determine whether the doctrine should be applied at this
stage of the litigation to the five categories of expenditures at issue. Judge Shuster granted
Princeton’s motion with regard to equipment depreciation. The court also granted Princeton’s
motion with respect to plaintiffs’ efforts to recover for building depreciation charged prior to fiscal
year 1996 because, the court found, “building depreciation—whatever it may have constituted—
was disclosed in every year.” Finally, the court ruled that there were disputes of material fact that
precluded it from determining at this stage of the litigation whether the doctrine applied to the other
categories of expenditures at issue.
Page 28 of 31
At trial, Princeton will present evidence demonstrating that the plaintiffs unreasonably delayed in
raising their objections to the remaining categories of the Foundation’s spending, as Judge Shuster
decided with respect to plaintiffs’ equipment depreciation and building depreciation claims.
Princeton will argue at trial that because of this unreasonable delay the court should not revisit,
item by item, spending decisions made over four decades by board members who used the gift to
develop one of the world’s preeminent graduate schools of public and international affairs.
53. What was the Robertsons’ “fiduciary duties” motion? How did the court rule?
In their “fiduciary duties” motion, plaintiffs asked the court to find that, under Delaware law
governing the fiduciary duties of board members, the University-designated trustees of the
Robertson Foundation have an inherent and disabling conflict of interest solely because they are
trustees and officers of the University. In essence, Mrs. Robertson’s children asked the court to
overturn the governance structure of the Foundation (and, by extension, the governance structures
of other supporting organizations around the country), which was put in place by their parents and
which explicitly requires that some of the University-designated trustees of the Foundation be
officers and trustees of the University. In addition, the motion sought a declaration that because of
this so-called disabling conflict of interest, the “entire fairness” standard should be applied by the
court in its review of their historical (and, potentially, prospective) conduct instead of the “business
judgment rule.” [See: Question 21]
Courts traditionally defer to the business judgments made by trustees and corporate directors, and
make exceptions only when they might have been motivated by considerations other than the best
interests of the corporation. In opposing plaintiffs’ motion, the Princeton defendants pointed to the
absence of such conflicts in this case. In addition, Princeton demonstrated that the governance
structure had been agreed to by Charles and Marie Robertson and later confirmed by Charles
Robertson in correspondence with the Internal Revenue Service. [See: Question 16, Question 17
and Question 19] Moreover, these arrangements had been critical both to preserve the charitable
nature of the Robertson gift and to ensure that decisions about the academic program of the
Woodrow Wilson School would remain under the control of the University. [See: Question 16,
Question 19 and Question 32]
The court agreed with Princeton that decisions made by the trustees of the Robertson Foundation
will be reviewed under this deferential business judgment standard unless plaintiffs can show that a
particular transaction was tainted by conflict of interest. Absent such a conflict of interest, Judge
Shuster ruled, plaintiffs will have to prove that the expenditures they challenge are completely
beyond the scope of activities authorized by the Foundation’s Certificate of Incorporation. As he
put it: “If Plaintiffs’ true motive in the present matter is to have the burden shifted to
Defendants…it would seem that such an attempt is misplaced.”
In rejecting plaintiffs’ claims, the court placed great significance on the fact that the Foundation is
not a private, family-controlled foundation but instead is what federal tax law calls a Type 1
“supporting organization” of Princeton. “Plaintiffs attempt to discount the significance of the
[supporting organization] model, but any such attempt ignores the main purpose of supporting
organizations—to be responsible to the public charities they support.” The court further emphasized
the critical fact that the governance structure was adopted at the inception of the Foundation,
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finding that “it was decided at the creation of the Foundation that the University would control the
Foundation Board.” Under these circumstances, the court concluded, the delegation of functions
like bookkeeping and calculation of the Foundation’s annual expenditures was not negligent but
“consistent with expectations and requirements of the Type 1 supporting organization model.”
The court found the spending decisions plaintiffs challenged “fundamentally distinguishable from
the line of cases” they asked the court to follow. “[S]o long as the course of action taken by the
fiduciaries is consistent with the Foundation’s mission, the Foundation benefits to an equal degree.
In such instances, it can hardly be said that the University receives a benefit to the exclusion and
detriment of the Foundation.”
54. What was the Robertsons’ “Spending and Offsets” motion? How did the court rule?
In their “spending and offsets” motion, Mrs. Robertson’s descendants asked the court to rule that
Princeton had overcharged the Foundation $17.5 million in certain specific spending categories for
the period between 1965 and 2003. In response, Princeton argued that plaintiffs’ motion was based
on a fundamental misrepresentation of how the Foundation’s annual contribution to support the
graduate program of the Woodrow Wilson School has been calculated for forty years and a
fundamental misunderstanding of the expenditures required to sustain the excellence of the
graduate program of the Woodrow Wilson School. [See: Question 43]
Judge Shuster denied virtually all of plaintiffs’ motion. The Judge determined that plaintiffs had
failed to sufficiently establish at this time any of the overcharges regarding four entire categories of
claimed overcharges, including charges relating to the undergraduate program, faculty salaries and
benefits, and equipment depreciation. For example, in rejecting plaintiffs’ claims for summary
judgment pertaining to $757,426 of alleged improper charges for “non-labor undergraduate
program expenditures,” Judge Shuster noted that a critical portion of “[p]laintiffs’ proofs, when
viewed in a light most favorable to Defendants, amount[s] to nothing more than conjecture at this
stage.” Regarding the category of income transfers, plaintiffs sought summary judgment with
regard to a $62,500 transfer, which the University admitted occurred in error; thus, the court
granted summary judgment as to that amount.
Judge Shuster agreed with Princeton that the court should consider the University’s long course of
conferring financial benefits on the Foundation, ruling that the facts and circumstances pertaining to
those financial benefits will be considered by the court in evaluating the overall equities of the case.
Princeton is confident that the evidence at trial will demonstrate its financial commitment to
supporting the Woodrow Wilson School and the Foundation’s mission, and that, after considering
the full range of annual charges and credits, the Foundation has benefited from that commitment.
55. What issues are left for trial? Is there a trial date?
The motions for summary judgment did not encompass all of the issues in the litigation, and there
are still contested issues that will have to be resolved at trial, beyond those carried over for trial
from the motions that have been denied. For example, the summary judgment motions did not
address allegations made by Mrs. Robertson’s children concerning specific past and ongoing
spending issues. Plaintiffs object to using Foundation assets on Woodrow Wilson School faculty
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summer salaries, faculty research, research centers, capital construction, administration and
overhead. [See: Question 43]
Judge Shuster retired from the bench effective March 1, 2008, and Superior Court Judge Maria
Sypek was appointed as his successor. Trial in the litigation had been scheduled to begin on
October 1, 2008. However, on August 1, 2008, Superior Court Judge Maria M. Sypek scheduled a
trial date of January 20, 2009. Judge Sypek was appointed successor to Superior Court Judge Neil
H. Shuster, who retired from the bench effective March 1, 2008. On September 24, 2008, the
Assignment Judge in Mercer County, Judge Linda R. Feinberg, informed the parties that Judge
John Fratto would preside over the trial. The trial is scheduled to begin on January 20, 2009.
56. Will the trial be heard by a judge or a jury?
The case will be heard by a judge. Judge Shuster retired effective March 1, 2008, and Superior
Court Judge Maria Sypek was appointed as his successor. On September 24, 2008, the Assignment
Judge in Mercer County, Judge Linda R. Feinberg, informed the parties that Judge John Fratto
would preside over the trial. The trial is scheduled to begin on January 20, 2009.
In 2006, Princeton moved to strike the plaintiffs’ late-in-the-day demand for a jury trial. New
Jersey law provides that the types of claims raised by the Robertson plaintiffs—“equitable” claims
and relief that concern issues of “fairness” as opposed to statutory or common law—do not entitle
them to a jury trial. Moreover, plaintiffs did not file their demand for a jury trial when they initiated
the litigation in July 2002, but waited until 2004 to request a jury trial, when they filed an amended
complaint and asked that a subset of their claims against Princeton be tried before a jury.
Judge Shuster granted Princeton’s motion, stating “New Jersey’s judicial system gives primacy to
equitable claims.” He then observed that plaintiffs’ legal claims arise out of the Foundation’s
Certificate of Incorporation, which “leads to the inescapable conclusion that the legal claims are
inextricably intertwined with [p]laintiffs’ equitable claims.” Consequently, the court granted
defendants’ motion, deciding to retain jurisdiction over this entire matter and not to empanel a jury.
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