Michigan college accuses MU of misusing millions in endowment

A Michigan college is accusing the University of Missouri of misusing millions of dollars in an endowment from 2003.

Hillsdale College, located in south Michigan, sued the university in 2017 over the school’s handling of a multimillion-dollar endowment to hire business and economics professors. The college says MU has not followed the instructions of the endowment and that Hillsdale should instead get the money.

Sherlock Hibbs, a 1926 graduate of MU, left $5 million to the university to create six professor positions in the school of business when he died in 2002. Hibbs asked the university to hire a “dedicated and articulate disciple of the free and open market economy (the Ludwig von Mises Austrian School of Economics).” The business school and chancellor would certify that the hires followed those tenets, then send the proof to Hillsdale College. If the spots were to remain open for five years, then the school would have to give up the money to Hillsdale College.

The college claims that university leaders balked at the idea of hiring professors that followed such ideals. Then-business school Dean Bruce Walker called the Austrian school “quite controversial,” according to the lawsuit, and focused on hiring people that followed some tenets that meshed well with the business school.

The lawsuit asks a judge to order the university to pay Hillsdale College for the millions already spent on the endowment and the remaining money in the program.

Four people currently hold positions at the university funded by the Hibbs trust are management professors Dan Turban, Karen Schnatterly and Rhonda Reger and marketing professor Lisa Scheer.

MU spokesman Christian Basi said the school has spent about $4 million from the endowment since 2003. The endowment fund currently has $9 million, as the school often invests the money in order to make returns off of them and continue the endowed programs.

“We always spend and use gift funds per the explicit wishes of our donors,” Basi said. “We value all of the gifts we receive and pride ourselves on being good fiscal stewards of the money entrusted to us by private donors and industry partners.”

The Missouri Supreme Court ruled in favor of the university June 25 to move the lawsuit from St. Louis County to Boone County.

Jay Nixon, former Missouri governor and attorney for Hillsdale College, said Hillsdale took its role as overseeing Hibbs’ endowment seriously.

“Mr. Hibbs’ legacy gift, relative to the University of Missouri, is not being used as it is described in his will,” Nixon said in a statement provided by Hillsdale. “Hillsdale College looks forward to thorough discovery into why the University of Missouri changed the terms of Mr. Hibbs’ gift. Hillsdale College intends to pursue this litigation until an appropriate resolution is achieved.”

Hibbs, whose career focused on finance, left his estate to dozens of different people and organizations. The MU chapter of Delta Tau Delta received $50,000 in General Electric stock. Hibbs also left $250,000 to Cottey College, a small school in Nevada, Missouri where his mother attended.

Hibbs also gave Hillsdale College $1.3 million for an endowed professorship in economics, named the “William E. Hibbs/Ludwig von Mises Chair of Economics.” The will requires the person to follow the Mises school of economics.