By Melissa Korn and Valerie Bauerlein
Four institutions have received windfalls of $261 million each after closely held Lord Corp., a Cary, N.C., manufacturing company, closed its $3.68 billion sale late last month to Parker Hannifin Corp.
Duke University, the Massachusetts Institute of Technology, the University of Southern California and the Cleveland Clinic are splitting evenly a surprise $1 billion-plus donation as a result of the sale, which also yielded a hefty payout for the firm's shareholders.
In the early 1980s, Lord Corp.'s then-chairman, Thomas Lord, established the Lord Foundations of North Carolina, Massachusetts, California and Ohio, to benefit Duke, MIT, USC and the Cleveland Clinic, respectively. Since their establishment the foundations had given $200 million to the four institutions, but the latest gifts arrived with little warning.
The institutions' leaders knew in April, when Lord and Parker Hannifin announced a deal, that they could benefit because the foundations owned the company stock. But exactly how much they would get wasn't known until the sale closed Oct. 29. The complexity of the arrangement would have made it difficult for the institutions to predict whether a payout might be $10 million or, as it turned out, $261 million, said Ed Auslander, Lord Corp.'s former president and chief executive, noting, "It was a great surprise."
Duke President Vincent Price said it was the largest single outside contribution to the university endowment since its founding in 1924. "We did alert the bank to be on the lookout for this wire transfer just to make sure they did not interpret it as a mistake," he said.
Duke plans to use the money to support undergraduate financial aid, engineering education and research.
The funds come with minimal restrictions, a flexibility that gives the recipients "the nimbleness to seize opportunities and address needs that can be hard to cover through traditional philanthropy," said MIT President L. Rafael Reif.
The payout has been in the works since the early 1980s, when Mr. Lord toured a number of institutions to determine his philanthropic giving strategy, Mr. Auslander said. Mr. Lord, who died in 1989, chose geographically diverse schools with robust business and engineering programs, as well as the Cleveland Clinic where he had been treated for arthritis, Mr. Auslander said.
"This opportunity doesn't come very often. I really want to get it right, " said USC President Carol Folt. She said the school is still considering how best to direct the money to help with education and research pursuits. It won't go to a specific new building or financial aid program, but may go toward programs related to advanced computational power and analytics, which have applications in the arts, humanities, science and health care.
Cleveland Clinic Chief Executive Dr. Tomislav Mihaljevic called the Lord donation, the largest the medical center has ever received, "a transformational gift." He plans to invest in basic research and graduate and postgraduate education, particularly in the fields of immuno-oncology and molecular oncology.
U.S. higher education has entered a new era of megagifts, with single donations to already-wealthy institutions dwarfing the entire endowments of other schools. Last November, former New York City Mayor Michael Bloomberg gave $1.8 billion to Johns Hopkins University for financial aid, and in September this year, the owners of Wonderful Co. pledged $750 million to the California Institute of Technology for sustainability and climate research.
Seven schools received gifts of at least $100 million in fiscal 2018, according to the Council for Advancement and Support of Education.
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