Oklahoma State and Pickens sue over life insurance fund-raising plan
Oklahoma State University and T. Boone Pickens, an OSU alumnus and the athletic department’s largest donor, have sued the Lincoln National Life Insurance Company over a life-insurance plan on alumni. The Oklahoma State University Athletic Department’s fund raising arm, the POSSE, established the Gift of a Lifetime program in 2007 that was expected to raise as much as $350 million after all 27 alumni had died.
The details about this case are being protected and what has been released is complicated, but the basis of the university and Pickens’ claim is that the insurance company “understated the costs of the program, overstated its potential financial benefits and charged the university inflated premiums.” Congress intervened with similar programs in 2006 and 2008, warning charities and fund raising organizations that these programs were set up to disproportionately benefit insurance companies.
Planned giving is certainly not the most popular giving method in most athletic departments, but if properly administered can be a lucrative gift option for the university. Oklahoma State’s case reveals the legal complexity of planned giving and identifies the reason many fundraisers steer clear of the giving option.
Due to the nature of planned giving, athletic departments need to be extra cautious, seek experienced legal advice, and partner with a trusted insurance company. If these precautions are not taken this form of giving becomes a less appealing big risk-big reward option.
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Matt Kirinovic
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[...] In a unique attempt to fundraise over $250 million for Oklahoma State Athletics, OSU Athletics Director Mike Holder, who also serves as president of Cowboy Athletics, is moving forward with a unique fundraising initiative. Specifically, the “Gift of a Lifetime” is centered on securing alumni who have a $10 million life insurance policy, and getting them to agree to make OSU Athletics the beneficiary. Additionally, the program is a brainchild of OSU’s largest supporter T. Boone Pickens, and has received considerable attention. [...]