Business Letter Assignment

You are the Director of Development at a major Los Angeles cultural institution.  Your job is to obtain funding for this organization’s cultural programs from corporate donors, government, wealthy individuals and foundations.  In addition to your ongoing fundraising duties, you have the extra responsibility of obtaining funding for a major new program, to begin in March, 2015, celebrating the contributions of Southern California to the cultural life of the U.S. This program will include concerts, theatrical performances, exhibitions at museums, and a variety of other events.

Your fundraising has been hampered by the weak economy, as donors have pulled back on their usual funding commitments. The President of your organization, Charles Underwood, had told you over the Summer that he was concerned about the slow pace of your fundraising for this 2015 program.  Mr. Underwood suggested that you might need help, and requested that you utilize the services of a fundraising consultant he had selected to assist you:  Russell Davis and Associates, located at 630 W. 5th Street, Los Angeles, CA.  90071.  Russell Davis is a powerful figure in philanthropy, with an outstanding record of bringing in big money for his clients, but he doesn’t come cheaply. Your organization’s contract with Davis and Associates, the terms of which had been negotiated with Davis by Mr. Underwood, provides Davis with a monthly retainer of $10,000 plus expenses from July, 2014 through January, 2015, plus a commission of 10% of any firm funding commitments he brings in to your organization.  You review his month expense reports, which you think are exorbitant and out of line, but Underwood has routinely approved them without question.  So far, you think this deal is a waste of money, as Davis has yet to deliver any major funding for the 2015 program.

In August, Mr. Davis had reported to you that he was making a presentation to Carolyn Chung, Director of  Community Relations for Mercedes Benz of Southern California (“MB”), to secure a commitment of $500,000 from MB to be named the major sponsor of  the 2015 program.  When you asked him at the end of August what had happened, Mr. Davis delivered some disappointing news: “they decided to pass.  They said our 2015 program didn’t fit into their objectives at this time. So that’s the end of that.  But I’ll keep up the contact, as you never know, maybe they’ll commit to other programs down the road…”

When you told this news to Mr. Underwood, who was waiting to hear whether the sponsorship had been secured, he said “Hmm….We’ll see about that.”  Underwood explained that he sat on the Board of Trustees of a major LA university;  also on that Board is George Landrow, the President of MB.  Last week, Mr. Underwood comes to you and states:  “Well, I talked to George at the September board meeting and pitched our 2015 program. He said he didn’t know anything about it because he leaves such things to his Community Relations office.  But once I briefed him on the program, he committed right then and there to pay $1,000,000. to be the major sponsor!”

You’ve just received a letter to you dated Sept. 30, 2014 from Mr. Davis.  In the letter, Mr. Davis states that he learned from his contacts at MB that MB had decided to pay $1,000,000 for the sponsorship of the 2015 program.  He states that he has talked to an attorney who agrees with him that he is entitled to his 10% commission, or $100,000, because the grant was made “largely as a result of the contacts I established at MB and the information I supplied about the 2015 program.”  He demands payment, and cc’s Underwood on his letter stating:  “I’m certain that my good friend Charles Underwood will agree that it’s only fair that I receive the commission on this deal.”

You arranged a meeting with Mr. Underwood immediately when you received the letter.  Mr. Underwood tells you:  “The only reason we got this money is because I’ve known George Landrow for years.  Russell had nothing to do with it.  Besides, he only asked for $500,000, and I hit him up for double that.”  He tells you to write back to Mr. Davis, and deny him the commission, pointing out that Davis was continuing to receive the $10,000 retainer exactly for this kind of exploratory work, but that the commission was payable only if Davis’s work resulted in a firm commitment of funds.  “That wasn’t the case here” Underwood says.  But he cautions:  “Keep me out of this, though.  Davis knows a lot of important people who can be useful to us, and I don’t want this to turn into a bad relationship, with him going around saying I’m trying to cheat him out of money he’s due.”

Your Task:  Write the letter per Underwood’s request. You must work with the facts as presented but can add such facts as may be reasonably necessary for your response to achieve its purpose.