COLUMBUS (WCMH) – Chances are you don’t have an extra $30 million in the bank that you are going to give to your alma mater.
But chances are better that you, or someone in your family, will benefit from the scholarships provided by that kind of generosity.
Nearly two decades ago, successful attorney, the late Michael Mortiz, gave $30.3 million to The Ohio State University Law School that now bears his name, with the understanding that each year, 30 deserving students would get a full-ride scholarship.
But that hasn’t happened, not even once.
And his family said they were shocked to learn the reason why.
“He grew up dirt poor,” said Moritz’s son Jeffrey Moritz. “I mean, he could not afford to go to law school.”
Moritz was so grateful to the university that gave him a full scholarship that he gave $30 million to pay it forward. A restricted endowment to fund four academic chairs and 30 annual scholarships.
“So when he gave the gift, he wanted to give the opportunity for other deserving students who couldn’t afford law school the opportunity to go to Ohio State,” Jeffrey Moritz said.
Jeffrey Moritz said the school has never awarded 30 scholarships in a year, estimating it only awards between 12 and 15 annually.
“And a third of the money, the $30 million, $10 million was allocated to scholarships,” said Moritz’s widow, Lou Ann Moritz. “That’s how important it was to Mike to make sure there would be students able to go only with a scholarship.”
Jeffrey Moritz said after learning only half the scholarships were being awarded, he learned something else: instead of growing through investments, his father’s $30 million was down to only $23 million.
He said the university was draining the money away for something labeled “development fees.”
“It pays for administrators’ salaries, entertaining donors, banquets, dinners, you know, cocktail parties,” said Jeffrey Moritz. “It’s really one big slush fund that they use to fund their activities.”
The university declined a request for an interview, but in a statement, said development fees are a “respected and widespread practice among universities.”
OSU’s statement reads:
Ohio State is forever grateful to our donors, including the late Michael Moritz. Their generosity funds student scholarships, teaching and learning, and research advancements across the university and around the world. Our donors continue to support the university in record numbers.
The Moritz College of Law and its students have benefited enormously from Michael Moritz’s generosity. The annual Moritz Merit Scholars Program provides full-tuition scholarships to some of the most promising students throughout their time at the law school, and the four holders of chairs endowed by his gift have been leaders in their fields and have brought national prominence to the college’s programs. The Dean’s Excellence fund enabled by the gift supports classroom technology and moot court renovations, the launch of the nation’s leading program in election law, and additional scholarships, grants and programs, while the Moritz Leadership Scholarships recognize outstanding student accomplishments each year.
Development fees are a respected and widespread practice among universities and charitable institutions because fundraising activities contribute significantly to the growth of the Long-Term Investment Pool, which is a vital component of universities’ overall funding and necessary for furthering their charitable and educational purposes. In a 2010 survey, the Association of Governing Boards of Universities and Colleges in partnership with the Commonfund Institute found that 100 percent of institutionally related foundations with an endowment of $500 million or more assess an endowment management fee. These fees are lawful, and recognized by Ohio law as a “prudent” cost associated with managing an endowment. Neither Moritz nor his attorney have ever offered anything – not a single legal authority, not any example of a different institutional practice – that calls into question the lawfulness or reasonableness of Ohio State’s development practices.
Ohio State has always been thoroughly transparent about the development fee, which went into effect in 1994, several years before Michael Moritz’s gift. In fact, the development fees were reviewed and discussed by The OSU Foundation’s Board of Directors while Michael Moritz was a member of the board.Ohio State University statement
Jeffrey Moritz said the university told him his father was aware of the fees, but he does not believe that.
“I mean, he was a meticulous attorney, a contract attorney, and if he was aware that these kinds of fees were going to be taken out, he would have wanted it in the contract,” Jeffrey Moritz said.
The Moritzs are asking a probate court to reopen Michael Moritz’s estate, so Jeffrey can stand in his father’s shoes and challenge the development fees.
Ohio State and the Ohio Attorney General opposed the effort, and the legal fight continues.
“He would be devastated, especially the way OSU has taken such an aggressive and adversarial approach to this whole thing,” said Lou Ann Moritz. “It would be very, very disappointing for him. I mean, it has been for our whole family.”
“It’s all about money, it really is,” Jeffrey Moritz said. “They have this pot of money they can take out however much they want, whenever they want, and no one is going to question them.”
But the Moritzs are doing more than asking questions. They are ringing a warning bell for other families who might have made endowment donations to the university.