Cincinnati Museum Center Sues Local Foundation Over Disputed Grant

Wow, this is a first! The Cincinnati Museum Center is suing a local foundation over  grant funding-$1M to be exact. Will this start a trend? How are foundation’s and other grant-making agencies protected from lawsuits? Will the Cincinnati Museum Center win its case? These questions will be answered soon I am sure; however in the meantime I believe that  organizations are scrambling and thinking of better ways to protect their assets and the way they do business. Please read the news article listed below to read more about this interesting case:

May 18th, 2010 | Add a Comment

A legal battle has erupted over a disputed $1 million grant to the Cincinnati Museum Center at Union Terminal from a local foundation, the Cincinnati Enquirer reports.

The Cincinnati-based Good Neighbor Foundation was established in 2006 upon the death of Gloria Fehr, who amassed more than $40 million in stocks and bonds from Time Warner and other companies. According to leaders of the Museum Center, the foundation, at the behest of one of its former directors, Arthur Katz, Jr., pledged $1 million to help restore an historic Union Terminal dining room not used since the 1950s. Indeed, a February 2006 letter to museum president Douglass McDonald from Katz, who died in 2007 and was a close friend of Fehr’s, referred to the “[f]oundation’s anonymous proposal to restore the dining rooms” and stated that “Our proposal remains the same: We will grant up to $1 million for the restoration of the private dining rooms, period.”

But foundation attorney C. Francis Barrett claims the grant was never awarded because the museum neglected to specify how the money would be used and then ignored a suggestion it submit a second proposal with those specifics. “A foundation cannot distribute money without a proposal being received,” said Barrett. “They just can’t write checks willy-nilly.”

Museum officials, who argue that they were very specific in their proposal, have filed a lawsuit in Hamilton County against the foundation. “You don’t ever like to file a lawsuit against a donor,” said McDonald. “I’ve been in this business twenty-five years, and nobody has ever not given a gift they verbally promised me, let alone a gift that was so detailed in writing….I feel like we have a moral obligation to honor the donor’s intent.”

This story from The Philanthropy News Digest, a service of the Foundation Center.

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