Noah Schwartz – Monday, November 27th, 2023
Healthcare has long been a favored target of philanthropists, and in most cases, the process is smooth; a new hospital wing is built and named in honor of the donor. However, with millions of dollars changing hands, sometimes donations aren’t as simple as signing a check.
In November, Barbie-maker Mattel made headlines after it was accused of walking back a $49 million donation to Los Angeles-based UCLA Health. According to a lawsuit brought by the health system, the toy maker had pledged the money to the health system in 2017 but put a pause on the donations in 2021 due to its poor financial state.
“As a last resort, UCLA Health has taken legal action to compel Mattel Inc. to honor its $49 million pledge,” a UCLA Health spokesperson said. “Litigation is not the University’s preferred path. UCLA Health made multiple good faith attempts to resolve this matter through meaningful dialogue, and those efforts were unsuccessful.”
Unexpected market swings can lead to healthcare philanthropists backing away as they reevaluate their priorities. In 2020, Evergrande, a Chinese real estate giant, pledged millions to Boston-based Harvard University for the fight against COVID-19.
However, as the company racked up $300 billion in debt liabilities it failed to make good on the second tranche of its donation, according to the university. The real estate company had also worked with Boston-based Mass General Brigham on a number of initiatives that, according to The Boston Globe, failed to materialize.
The tricky contractual gray area of philanthropy can also result in donors taking healthcare providers to court. In 2012, country music star Garth Brooks was awarded $1 million after Integris Canadian Valley Regional Hospital failed to use his $500,000 donation to build a women’s center honoring his mother.
Mr. Brooks sued the hospital when he learned that his donation was being used for other construction projects. Hospital officials claimed that Mr. Brooks did not put any restrictions on the donation and only later asked to build the women’s center.
For health systems that rely heavily on fundraising and philanthropy as part of their brand identity, legal battles over donations can be more common. In 2022, ProPublica reported that Memphis, Tenn.-based St. Jude raised $7.5 billion in the previous five years.
Since bequests in wills to the research hospital made up 20% of the fundraising in that time period, the investigative outlet found that the health system has engaged in costly legal battles relating to estate planning.