## Facts

- Tift College, a private women’s college in Forsyth, Georgia, was created by legislative act and operated for charitable educational purposes, historically affiliated with the Georgia Baptist Convention.
- By the mid-1980s, Tift faced declining enrollment and financial strain.
- In 1986, Tift and Mercer University executed a merger agreement making Tift “Tift College of Mercer University.”
- The agreement required Mercer to make a good-faith effort to operate the women’s college on the Forsyth campus, while treating preservation of an entity bearing the Tift name for women’s Christian education as a primary objective.
- After the merger closed, Mercer decided to discontinue operating the women’s college on the Forsyth campus and instead preserve the Tift entity within Mercer at another location.
- A district attorney, former Tift trustees, a former professor, an opposition organization, and alumnae/donors sued to set aside the merger, alleging Tift should be treated as a charitable trust requiring court approval and alleging fiduciary failures by Tift’s trustees.

## Issues

1. Whether Tift College was a charitable trust or a nonprofit corporation for purposes of governance and merger authority.
2. If Tift was a nonprofit corporation, whether Georgia nonprofit corporate law authorized the merger without prior court approval.
3. Whether Tift’s trustees breached fiduciary duties in approving the merger such that the merger should be invalidated.
4. Whether the district attorney had standing to challenge the transaction to protect charitable interests.

## Decision

- The Supreme Court of Georgia reversed the trial court’s order setting aside the merger.
- The court held Tift was a nonprofit corporation governed primarily by the Georgia Nonprofit Corporation Code, not a charitable trust whose fundamental changes require equity-court approval.
- The court concluded Georgia nonprofit corporate statutes authorized Tift to merge with another nonprofit corporation without obtaining prior court approval.
- The court declined to invalidate the merger based on alleged fiduciary failings, treating the approval as a good-faith corporate decision made in response to serious financial pressures.
- The merger remained effective; the lack of court approval did not render it void.

## Legal Principles

- A charitable educational institution organized as a nonprofit corporation is generally governed by nonprofit corporate statutes, even though its assets are devoted to charitable uses.
- Absent an express statutory requirement, a nonprofit corporation’s statutory power to merge is not conditioned on prior approval by a court of equity.
- Courts generally defer to informed, good-faith nonprofit board decisions under corporate fiduciary standards when directors act to address financial distress and pursue the organization’s mission.

## Conclusion

The Georgia Supreme Court upheld the Tift–Mercer merger, rejecting the trial court’s characterization of Tift as a charitable trust and holding that Georgia nonprofit corporate law permitted the merger without prior judicial approval; alleged fiduciary concerns did not justify setting the merger aside.


Corp. of Mercer Univ. v. Smith, 258 Ga. 509, 371 S.E.2d 858 (Ga. 1988)