A wealthy alumnus is promising to give the University of Notre Dame its biggest unrestricted gift yet, $100 million it can use for any purpose under the sun.
The pledge is coming from 1978 graduate Kenneth Ricci, a private pilot and investor, who is making the gift in part to resolve some trickier issues he had encountered in planning for the future of his privately held businesses.
The transfer of the money won't happen until after his death, the timing of which is anyone's guess, he said. But the donation is a way to set aside some money for his family and their foundation while also resolving the transfer of ownership in his business after his death at the best possible terms, assuming none of his three children is interested in stepping up to run them.
As for Notre Dame, where the Cleveland native got an accounting degree and played trumpet in the Band of the Fighting Irish, "the one thing they don't have is money they can do what they want with."
As a single bequeath, it would eclipse the $75 million given by fellow alum Jay Jordan, a Chicago-area private equity investor, in 2014, though Jordan has given twice that to Notre Dame over the years, much of it earmarked for research in science and technology and a science building bearing his name. Both men are on the board of trustees.
But it is an enormous amount of money that doesn't have any directive attached to it, and that is what is turning heads in the philanthropic world. "There aren't many people who give this much unrestricted," said Greg Dugard, the university's associate vice president who works with donors like Ricci on gift planning. "I'm not aware of it anywhere in higher ed."
Overall giving by individual alumni to their universities was $9.9 billion last year through June, according to the Council for Aid to Education. That is out of $41 billion in total given by foundations, individuals and others. In 2016 there were only two gifts of $100 million or more, down from eight in 2015.
A commitment such as the one Ricci has made wouldn't be counted in the tally yet because it has yet to happen, said Ann Kaplan, who runs the survey for the Council for Aid to Education. But she said unrestricted giving is unusual and makes up less than 10 percent of gifts, and one of that size is very unusual.
The way it works is Notre Dame will be bequeathed a stake in Ricci's family limited partnership. including his privately held business Directional Aviation Capital, which holds stakes in a collection of aviation-related companies. As successor general partner, the university will be responsible for selling the business assets and returning any proceeds above $100 million to the family. Ricci says he may increase the amount of the donation depending on growth in the value of the businesses.
Directional Aviation holds stakes in Flexjet, a private plane fractional ownership rival to NetJets, and similar aviation-related companies. The $100 million is roughly one-third the current value of the holdings, Ricci said.
His three children — two are in their 20s and one is a teenager — each have a 20 percent stake and the option to buy into the business. But if they don't want to (and he says only one daughter has been involved in management so far), this gives them a way to cash out using the expertise of Notre Dame, which will be responsible for valuing the assets when the time comes and finding the best buyers for them.
Privately held businesses often have succession as their main stumbling block, said Michael Baker, an estate and business planning lawyer in Boston who did not work on this matter. The big unknown here is when and who will be able to take over, especially given it could be two or more decades in the future. Signing the university up as the caretaker answers that question. "This allows him some comfort in who he is selecting," Baker said.
Ricci went to Notre Dame as an Air Force ROTC scholarship recipient and worked as a commercial pilot in the early 1980s before attending law school and going into business as a private pilot. One of his early claims to fame was flying around then-presidential candidate Bill Clinton during his first run for the White House in 1992.
Ricci and his wife donated $5 million last year to Notre Dame to build an outdoor home for the marching band, and they have previously given the funds for a band rehearsal hall. The $100 million is in addition to those funds.
The most likely use of the money, he said, will be for financial aid. Notre Dame costs more than $69,000 a year but three-quarters of the undergraduate students get financial aid. Dugard said the university is currently aiming to raise $1 billion for financial aid in a capital campaign that has so far raised $3.5 billion.