Delaware Attorney General Alleges Mismanagement of duPont Foundation
Delaware Attorney General Alleges Mismanagement by duPont Foundation
In court papers filed by its attorney general, the state of Delaware has alleged that trustees of a $4 billion charitable trust established by the late Alfred I. DuPont have shifted the primary focus of the trust from the state to Florida, despite a stipulation in duPont's will that Delaware was to be the primary beneficiary of the trust, the Associated Press reports.
In addition to providing annuity payments to beneficiaries of the will, the trust underwrites the work of the Nemours Foundation, which runs the Alfred I. duPont Hospital for Children and the Nemours Mansion and Gardens in Wilmington, as well as other nonprofit intitutions in Delaware, Florida, New Jersey, and Pennsylvania. In the suit, Delaware officials claim the trustees altered the governance structure of the foundation in a way that dilutes its focus on Delaware, thereby reducing its charitable distributions in the state.
The specific allegations include a claim that $72 million used to renovate the Nemours Mansion and Gardens that should have been segregated from the foundation's regular distributions was improperly counted against the state's share of those distributions. The state also alleges that more than $102 million in "corporate and shared services" was counted against its share of annual trust distributions from 2005 to 2010, compared to only $19 million for Florida over the same period and none to Pennsylvania or New Jersey. In addition, Delaware claims that the trust has improperly restricted public access to the mansion and gardens by barring children under the age of 12 and allowing no more than forty-eight visitors at a time on the 222-acre site, even though duPont directed that it be maintained for "the pleasure and benefit of the public."
The court filing comes in a case in which the trustees are seeking to modify the trust for tax purposes. Under the current framework, the non-charitable annuity payments to beneficiaries of the will prevent the trust from qualifying for tax-exempt status for overseas investments. The trustees want to split the trust, with one side being used for beneficiaries, who receive a total of approximately $57,000 annually, and the other side continuing to finance the Nemours Foundation. According to the trustees, such a split would enable the trust to avoid some $3 million a year in foreign income taxes that could be spent in the United States for charitable purposes.
In a statement, Hugh Durden, chairman of the Jacksonville-based trust, told the AP that Delaware's accusations "only serve to delay the filing by the duPont trustees to split the trust in two — a move that would achieve significant tax savings which will permit even more children to receive the benefits of Alfred I. duPont's extraordinary gift."