University of Alabama Sued Over Donor-Funded Scholarship Program

scholarship

The University of Alabama is being sued by a private foundation who claims that the institution broke a contract by taking over $1.3 million for a scholarship program for first-generation students.

Filed by the Suder Foundation in July 2015, the lawsuit claims breach of contract, anticipatory breach of contract, promissory estoppel, and unjust enrichment.  The group is asking for the funds to be returned, as well as attorneys and court fees and pre- and post-judgment interest.

“A donor should not have to worry that a grantee, especially a nationally known university, would not fulfill the contractual promises it made when accepting a gift or grant. Sadly, we have no choice but to take this undesirable course,” said a released statement from Eric Suder, founder of The Suder Foundation.

According to the complaint filed in Dallas County District Court in Texas, the foundation states that it gave $1.3 million to the college for scholarships and startup funds as part of the contract with the school to take part in the First Scholars program which looks to improve the graduation rates of first-generation students.

A response was filed by the university in September 2015 in which the accusations were denied.  The school said it had decided to discontinue the program and that the foundation had been properly notified, writes Ed Enoch for The Tuscaloosa News.

According to the lawsuit, weeks after UA received the final check from the Suder Foundation, the school broke its contract when it notified the foundation in September 2014 that it was making changes and would not be continuing to participate in the First Scholars network.

The suit claims that the school did not provide data for the students who participated in the program in 2014 and 2015.  In addition, it claims that staff did not attend conferences or meetings.

University president Judy Bonner said that the school has continued to give scholarship support to the 57 students who had originally been admitted as part of the First Scholars program, and that there were currently four additional first-generation programs at the school which serve a total of 110 students, writes Paul Sullivan for The New York Times.

Henry Goldstein, chief executive of Family Foundation Management/Counsel, said it was odd that the school would cancel the program and then not return the money given to them.  He used the $20 million donation made by Texas financier Lee M. Bass to Yale in the 1990s as an example, saying that Bass had wanted the money to be used to create a Western civilization curriculum.  However, when Yale did not do this, the money was returned.

Goldstein added that if UA did not do the same, it would undermine the confidence of other donors wishing to invest in the school.

The First Scholars program offers financial, social, emotional, and personal development support to first-generation college students who participate. Outcomes are evaluated by the foundation through the collection of data pertaining to students who take part.

Funding is provided by the foundation to public universities it partners with to use for startup and scholarships during the first four years, with the universities then taking over funding in the fifth year.

Kristin Decarr

Kristin Decarr

Kristin Decarr

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