Father left $21 million in a charitable fund; son sought a $1 million donation but his access was cut off by the foundation

A $21 million charitable fund is at the centre of a legal dispute after Philip Peterson, the son of its founder, alleged that WaterStone cut off his access and stopped acting on his recommendations. The fund was created by Gordon Peterson in 2005 for Christian charitable causes, and Philip became its sole successor adviser after his mother died. According to the lawsuit, the dispute escalated in 2024, when access to the account was revoked and a proposed $1 million donation was not processed. The case is now examining how much authority successor advisers actually have over donor-advised funds.How did the $21 million fund become the subject of a lawsuitGordon Peterson established the Peterson Family Stewardship Fund with WaterStone in 2005. The fund was intended to support evangelical Christian charitable purposes. WaterStone, the name used by Christian Community Foundation, became responsible for holding and administering the money.According to MinistryWatch, Gordon died in 2019. His wife Ruth and son Philip had been recognised as advisers to the family fund from 2017. When Ruth died in 2021, Philip became the sole successor adviser. For several years, WaterStone continued to process the charitable grants he recommended.The fund was worth more than $21 million by the end of 2023, according to the lawsuit. CNBC reported that Peterson had continued to make recommendations from the account until the relationship with WaterStone deteriorated in 2024. At that point, he says, his access to information about the fund was cut off.What changed between Peterson and WaterStoneThe disagreement appears to have centred on how the fund would be managed and distributed in the future. CNBC reported that Peterson disagreed with WaterStone over a proposal concerning the fund's principal and investment income. He subsequently raised the possibility of moving the fund to another sponsor.According to MinistryWatch, Peterson says a March 5, 2024 Zoom call with WaterStone chief executive Ken Harrison ended with Peterson being told that further communication with the organisation would cease. Peterson then tried to restore access and contacted board members, but says those efforts did not resolve the dispute.The lawsuit alleges that WaterStone revoked his online access, suspended his advisory privileges and stopped processing his grant recommendations. Foley & Lardner reported that Peterson also alleges WaterStone refused to provide information about the account and directed him to stop contacting the organisation.$1 million donation at the centre of the disputeOne of the most significant recommendations involved a proposed $1 million grant to Operation Mobilization, a Christian missionary organisation that had previously received support from the Peterson family fund.MinistryWatch reported that Peterson says WaterStone denied the distribution after previously approving and administering his recommendations. It also reported that the fund made no charitable grants in 2024, according to the lawsuit.The issue was particularly important to Peterson because Operation Mobilization had a history of receiving support from his family. His lawsuit argues that WaterStone's actions interfered with the charitable purpose for which his father had established the fund.In February 2025, WaterStone agreed to make $400,000 in distributions, according to MinistryWatch. Peterson accepted those distributions but also raised concerns that the fund was still behind on charitable contributions from earlier years.What does the lawsuit say about control of donor-advised fundsThe case raises a broader issue because a donor-advised fund does not work like a personal bank account for charitable giving. Once money is contributed, the sponsoring organisation legally controls the assets, while the donor or successor adviser can recommend where grants should go.Foley & Lardner explained that this distinction is central to this case. The law firm said WaterStone's sponsorship agreement gives it ultimate control and discretion over the fund and states that the original donor irrevocably gave up ownership and other rights to the contributions. That arrangement is common to donor-advised funds. The adviser can have an important role in suggesting charitable grants, but the sponsor retains legal control over the money.The case could clarify duties and rights of successor advisers and sponsorsPeterson's lawsuit seeks more than the payment of one disputed grant. According to MinistryWatch, he is asking for an accounting of the fund, clarification of the rights and duties between himself and WaterStone, and an order requiring the organisation to carry out its responsibilities, including recommended grants. He is also seeking to transfer the fund to another organisation.Foley & Lardner reports that the case could clarify whether advisory rights that donors and successor advisers commonly rely upon are legally enforceable. WaterStone has argued in its motion to dismiss that it is not contractually required to follow Peterson's recommendations because the sponsorship agreement leaves ultimate authority with WaterStone.The case reaches beyond the Peterson family. It could help clarify what happens when a donor-advised fund sponsor and a successor adviser no longer agree about how charitable money should be handled.You use AI every day. Now get your AI Quotient. Take the AIQ test.