A northern Wisconsin college spent down its endowment before it closed. Some donors think it broke the law.

Northland College in Ashland, Wisconsin, borrowed $22 million from its endowment before closing in 2024, citing a Wisconsin state law that permitted the withdrawal. Donors and watchdogs now question whether the college violated its fiduciary duties and the legal intent behind endowment protections.

The college claims Wisconsin Statute 36.09 authorized the borrowing. That law allows universities to access endowment funds under specific circumstances, but donors argue Northland misused the provision. They contend the college should have preserved the endowment for its stated charitable purpose, not depleted it as the institution faced financial collapse.

Endowments function as long-term financial anchors for colleges. Donors typically give with the expectation that their gifts will support the institution in perpetuity, with spending limited to a small annual percentage. Northland's decision to drain $22 million from the endowment before closure raises questions about whether the college acted as a proper steward of restricted gifts.

The dispute centers on statutory interpretation. Northland argues the law provided explicit authority for the withdrawal. Critics counter that the law was designed for temporary liquidity needs, not endgame liquidation. Some donors have raised concerns about whether the college's governing board fulfilled its legal obligation to preserve donor intent.

Wisconsin's Office of the Secretary of State oversees nonprofit compliance, though investigation into the matter remains unclear. The case highlights a gap between what state law technically permits and what donors reasonably expected when they gave money to support the college's educational mission.

The closure affects roughly 600 students who enrolled for fall 2024. Most were absorbed into other institutions through teach-out agreements, but the endowment dispute adds a layer of complexity to the college's final chapter. If donors pursue legal action, courts would need to determine whether the college's reliance on the statute trumps fiduc