By Brad Layland, Chief Executive Officer & Senior Consultant
In the world of fundraising, relationships are everything. The connection between a donor and the organization should not be transactional but deeply relational, built on trust, mutual understanding, and shared values. When this relationship is strong, it can lead to transformative gifts that propel an organization forward. However, when this connection is superficial or neglected, the results can be disastrous. The recent controversy surrounding Florida A&M University (FAMU) and a $237 million stock donation from Gregory Gerami is a stark reminder of what can happen when nonprofits don’t take the time to truly know their donors.
On May 4, 2024, FAMU, a historically Black college and university (HBCU), announced with great fanfare that it had received a donation of stock valued at approximately $240 million from Gerami, a 30-year-old hemp entrepreneur. For FAMU, this nine-figure gift seemed like a dream come true. The announcement was made during the university’s spring commencement, a moment that should have been a celebration of FAMU’s future.
But that celebration quickly turned into a nightmare. Within days, questions began to surface about the stock’s actual value and the legitimacy of the donation. Concerns arose over the university’s limited vetting of Gerami, the nature of the early negotiations, and the decision to announce the gift during a high-profile event without thorough due diligence.
As the details of this debacle emerged, it became clear that the university had yet to establish a meaningful relationship with Gerami before accepting his gift. Had FAMU’s leadership taken the time to understand Gerami’s motivations, investigate his financial history, and verify the value of his donation, they might have avoided the public embarrassment and internal turmoil that followed.
Early in my fundraising journey, one of my mentors, a Texan with plenty of wisdom to share, gave me advice that has stuck with me ever since. He told me, “Sometimes donors have big boots, a big hat, but no cattle.” It was his way of saying that some donors may talk a big game and seem impressive on the surface, but they don’t always have the substance or genuine capacity to back it up. This is exactly what happened in the case of FAMU and the promised $237 million gift. The university, dazzled by the size of the “hat”—the potential of a transformative gift—failed to look closely enough to see if there were any “cattle”—the real, tangible assets and credibility behind the offer. This incident is a stark reminder that in fundraising, as in life, appearances can be deceiving, and it’s crucial to dig deeper, ask the right questions, and truly understand the substance behind a donor’s promise.
The fallout from this situation was swift and severe. Former President Larry Robinson, Ph.D., and Shawnta Friday-Stroud, Vice President for University Advancement at the time, were heavily criticized. Robinson was forced to call an emergency board meeting where he admitted to ignoring warning signs and acknowledged that he had wanted the donation to be real so badly that he overlooked crucial red flags. Both Stroud and Robinson also announced their resignations soon after.
This incident underscores a vital lesson for all nonprofit leaders and major gift fundraisers: never rush the process of building a relationship with a donor. The temptation to celebrate a big gift can be overwhelming, especially when it promises to address long-standing financial challenges. However, as the FAMU case illustrates, celebrating prematurely without doing the necessary due diligence can lead to catastrophic consequences.
So, what can we learn from this? Here are some guiding principles:
- Get to know your donor. Understanding your donor’s history, motivations, and financial standing is essential.
- Involve your team and board. Major gifts should never be handled in isolation. Involve senior leaders, your board, and legal experts early. The fact that FAMU’s board was unaware of the donation until it was publicly announced is a glaring oversight. Transparency within your organization is vital to safeguarding its interests.
- Do basic research on your donors. A simple internet search could have revealed Gerami’s troubled history with a previous $95 million donation to Coastal Carolina University, which fell apart under similar circumstances. Had FAMU taken the time to dig deeper into Gerami’s past, they might have approached this gift with greater caution.
- Build the relationship over time. Large gifts result from years of cultivating a relationship with the donor. When large gifts appear out of nowhere, stepping back and asking the right questions is essential. Pay attention and do extra due diligence if something feels too good to be true.
As nonprofit leaders, we must remember that our primary responsibility is to our mission and the people we serve. By taking the time to truly know our donors, we not only protect our organizations from potential harm but also build the kind of trust that leads to meaningful, lasting partnerships. Let the experience of FAMU serve as a reminder: knowing your donors is not just important—it’s essential.