The Pledge Is Not the Gift: What Foundation Boards Should Learn from Harvard and MIT – Charity Lawyer Blog

Foundation boards like to celebrate large pledges. They validate strategy. They signal momentum. They make annual reports look good.

But the Jeffrey Epstein university scandals, documented by MIT’s own independent report and covered extensively by TIME, AP News, and others, demonstrate something boards often forget:

The pledge itself can be the product.

When the promise becomes leverage

MIT publicly released the findings of an independent fact-finding report detailing its relationship with Epstein, including how funds were accepted after his 2008 conviction and how some donations were handled as “anonymous” at the institution’s initiative.

The TIME reporting on the resignation of the MIT Media Lab director makes clear that the issue was not simply the money. It was the access, the ongoing relationship, and the reputational consequences that followed once the facts were exposed.

At Harvard, similar questions surfaced. Nonprofit Quarterly reported on Harvard’s acknowledgment and apology for accepting Epstein-linked funding and the internal reviews that followed.

The lesson for foundation boards is not about the specific donor. It is about structure.

When institutions announce large commitments — especially from controversial or high-risk donors — they often:

• Publicly elevate the donor’s status,
• Provide affiliation or access,
• And embed the donor into institutional life long before all funds are actually received.

That creates leverage.

The governance risk hiding inside a pledge

Here is the uncomfortable truth for boards:

A large pledge can create psychological obligation before it creates financial benefit.

Development teams may begin to treat the donor as “transformational” even if only a fraction of the funds have been paid. Leadership may hesitate to question conduct or access because the relationship is seen as too important to disrupt.

That is not a fundraising issue. That is a governance issue.

The MIT case, as described in its own published review, showed that internal processes were modified to accommodate a donor flagged as problematic. The existence of a “special process” for a controversial donor is itself a red flag for boards.

What foundation boards should do differently

If you sit on a private foundation board — or any nonprofit board — you should consider adopting the following controls:

1. Treat pledges as contingent assets, not earned prestige

No public announcement of a “transformational” pledge until:

• The agreement is signed,
• The first installment is received,
• Due diligence is completed and documented.

2. Separate recognition from unpaid commitments

Institutional titles, advisory roles, physical access, and website profiles should be tied to funds received, not funds promised.

3. Prohibit “special donor lanes”

If your organization creates a customized approval process to work around internal compliance flags, you are not being flexible. You are eroding internal controls.

4. Document donor vetting at the board level

The MIT and Harvard experiences illustrate how reputational consequences can reach leadership, trustees, and affiliated boards years later. Due diligence must be documented, not assumed.

The real takeaway

What the national reporting makes clear is that the financial amounts involved were not the only story. The reputational damage, resignations, and institutional apologies were the real cost.

Boards should ask themselves a simple question:

“If this donor relationship were on the front page tomorrow, would we be proud of the controls we put in place or would we be explaining why we made exceptions?”

If the answer is unclear, fix it now before the pledge becomes the problem.

Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.