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Judge agrees to let Avila University tap into restricted scholarship donations

Avila University has won a court victory in its efforts to gain greater access to $6.4 million of its endowment.
Zach Bauman
Kansas City Beacon
Avila University has won a court victory in its efforts to gain greater access to $6.4 million of its endowment.

Donors had specified that Avila University in Kansas City shouldn’t spend the principal of its endowment, which is invested and used to pay for scholarships. However, Avila argued it needed access to all of the money, otherwise it would be "challenged to meet its financial obligations."

Avila University can lift restrictions that some donors placed on their gifts now that a judge on Wednesday has approved the school’s petition to start spending more than a third of its endowment.

The move, which Jackson County Circuit Court Judge Justine Del Muro approved in an Oct. 18 order, lets the university access $4.8 million within the current school year and about $1.6 million during the 2024-2025 school year, a total of $6.4 million.  

Donors had specified that Avila shouldn’t spend the principal of parts of its endowment — money intended to remain in place and fund the school through interest earned on investments — but should instead keep the funds as a source of investment income.

Donors’ instructions would typically take precedence over Avila’s wishes, but universities can petition a court to have donor restrictions changed if they become illegal, wasteful or impossible to carry out. The Missouri attorney general also has an opportunity to weigh in on changes to restrictions.

In Avila’s case, the donations in the 97 funds affected by the change were designated to pay for scholarships. The university argued it might not be able to give any scholarships if the money remained restricted because, without the money, “the University will be challenged to meet its financial obligations.”

During a brief bench trial Wednesday, Del Muro said she didn’t need to hear additional evidence because the attorney general was not opposing the petition. The judge said that before approving it, she would make some changes to the format, but not the substance, of the proposed order Avila submitted.

Avila still plans to use the funds for scholarships, but it can now spend the principal of the donations in addition to the interest.

While spending the money could cut off a source of future income, Avila President Jim Burkee said in September that the university plans to replace the endowment funds once its revenue grows.

Avila reported its largest-ever incoming class this school year after reporting declining enrollment for about a decade, Burkee said. He sees using the funds as an investment that will help Avila over current financial challenges and promote continued growth.

The university’s total endowment was $18.1 million as of April 30, the petition says, with $10.6 million of that money subject to donor restrictions.

This story was originally published by theKansas City Beacon.

Maria Benevento is the education reporter at The Kansas City Beacon. She is a Report for America corps member.
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