A small liberal arts college in northern Wisconsin, Northland College, has found itself at the center of a legal battle after its closure in 2025. The college's endowment funds, which were meant to be preserved for future generations, were instead used to cover operational expenses, leading to a shortfall of $19 million. This has sparked a contentious debate among donors, who argue that the college violated the law by borrowing from its endowment funds without proper authorization. Brett Norgaard, a donor who established two endowed funds in memory of his son, Bjorn, is among those who feel betrayed by the college's actions. He believes that the college did not follow the family's intent and that the funds should have been preserved for the intended purposes.
The Uniform Prudent Management of Institutional Funds Act (UPMIFA) in Wisconsin requires institutions to honor donor restrictions on spending endowment funds and to manage and invest them in good faith. However, the college's financial statements show that it had borrowed $22 million from its endowment funds between 2012 and 2019, and the remaining $3.3 million of donor-restricted funds is now in question. The college has petitioned the court to release restrictions on these funds and approve its plan for distributing the remaining money to various nonprofit groups, institutions, and foundations.
The legal battle has raised concerns about the college's financial management and the potential impact on donors' trust. Some donors, like Norgaard and the Mead Witter Foundation, have raised concerns about inconsistencies in the college's financial reporting and the amount borrowed from its endowment. They argue that the college's actions suggest a violation of the law and a breach of trust with donors. However, the Attorney General's office has taken no position on the case, citing the lack of clear violations under the law.
The court's decision has created winners and losers among the remaining funds. While the court largely approved the college's proposal, it also required the college to pay the full amount of the Becky Rom Wilderness Advocacy Scholarship. This has reduced funds allocated to other nonprofit groups, such as the Sigurd Olson Education Institute and the Burke Center for Ecosystem Research. Despite this, the Sigurd Olson Education Institute is set to receive around $900,000, which will help further the legacy of writer and conservationist Sigurd Olson.
The case has raised important questions about the management of endowment funds and the role of the Attorney General's office in overseeing institutions. It has also highlighted the potential impact on donors' trust and the importance of transparency and accountability in the management of charitable funds. The legal battle continues, with donors seeking justice and the college striving to balance the interests of all involved.
