It is pretty clear to me @gardenstategal is a boarding school insider 
I just talked to Hotchkiss’ former CFO, who said restricted gifts are not an issue. If the school cannot figure out a way to use the gift in a way that furthers its mission, they would go back to the donor, if they are alive, and ask that the restrictions be broadened. If the donor is not alive, they can petition the state attorney general to broaden the restrictions. And they have done this.
As to the permanent endowment issue, he said ALL funds, unless they have a spend down provision, become part of the permanent endowment, with only the gains, not the corpus, being available to spend.