Hospital Loses to Garth Brooks in Lawsuit Over $500,000 Donation

A wave of unwelcome publicity has engulfed a nonprofit hospital in Yukon, Okla., hometown of the country music singer Garth Brooks, after a jury last month ordered it to return a $500,000 gift from the star—and pay him another $500,000 in damages.

The hospital’s $1-million loss contains a lesson for fundraisers about how easily things can go wrong with a big gift. Mr. Brooks sued Integris Canadian Valley Regional Hospital after he said it failed to honor a promise to establish a women’s health center named for his mother.

Hospital officials agree that they discussed the center with Mr. Brooks, among other possible uses for his $500,000 gift.But the two sides disagree about what happened after that.

The hospital argued in court that Mr. Brooks made the $500,000 gift in 2005 anonymously and attached no restrictions about how it would be used, and only later did he request that a women’s center be named for his mother, who died of cancer in 1999.

Hospital officials told The Chronicle that $500,000 was not enough money to name a women’s center. They said they had tried to persuade Mr. Brooks to make an additional gift to name a the center or to support another project, while also urging him to sign a formal agreement outlining terms of his contribution.

All to no avail.

That’s because Mr. Brooks already had an oral agreement with the hospital’s president, James Moore, that his gift would be sufficient to name a the women’s center for his mother, says John M. Hickey, Mr. Brooks’s lawyer.

When Mr. Brooks, frustrated by what he saw as the hospital’s desire to use his money for other purposes, demanded his money back, hospital officials refused, citing its policy not to return unrestricted gifts, Mr. Hickey says.

The hospital’s attempts to reach a settlement broke down.

Need for Clarity

The Brooks lawsuit is among the latest instances to prompt nonprofits to think hard about how they would respond to a request for the return of a donation.

Some institutions have policies, generally backed up by state law, explaining that once the organization has the money, it is no longer the donor’s and won’t be returned.

Many groups make this clear in as part of a formal documents signed by a donor and an institution.

Requests by donors to have their money returned rarely make it to court, but when they do, it can be expensive. Princeton University had to return $50-million to the Robertson family, which charged that the university had not followed their parents’ intent in using a decades-old gift that had grown into a $700-million endowment.

Unlike the Princeton case, however, Mr. Brooks had no formal agreement with Integris hospital. But both instances led courts to rule that the institutions erred in deviating from the donors’ intent

“The jury found that Integris intentionally misrepresented to Mr. Brooks” the terms of the women’s center, says his lawyer, Mr. Hickey, And, he notes, “the jury found they acted with malice.”

To prove that point in court, Mr. Hickey read an e-mail that Mr. Moore, the hospital’s president, wrote in 2009 to his colleagues after Mr. Brooks asked that his donation be returned. “We may not deny Garth access to the money,” it read. “However, we can sure as hell make him work to get it back.”

The lesson for fundraisers: “It obviously is a cautionary tale,” says Hardy Watkins, a spokesman for the hospital. “If a donor asks for the money back, you give it back unless you have a written agreement. If a donor begins to question how the money would be used, give the money back.”