July 26, 2016 | Read Time: 4 minutes
More nonprofits are offering naming rights to donors of multimillion-dollar gifts. Organizations are offering all kinds of assets, including programs, buildings (or parts of buildings), scholarships, and professorships. In some cases, even the name of the organization itself can be changed to recognize a big donor.
While naming something for a donor may be a public and strategic way to honor someone’s generosity and encourage others to give, those deals can also attract unwanted controversy.
When Hollywood mogul David Geffen pledged $100 million last year to renovate and rename Lincoln Center’s concert hall, the venue was roundly criticized over the deal, which involved paying the family of former namesake Avery Fisher $15 million to reclaim the naming rights and granting them to Mr. Geffen in perpetuity.
Paul Smiths College in upstate New York faced a backlash when alumni and others learned that a $20 million gift from philanthropist Joan Weill would mean adding her name to the institution’s. The squabble ended up in court, and Ms. Weill pulled her pledge when a judge upheld opponents’ argument that the change violated a stipulation by the college’s founder.
Avoiding Missteps
Such dramatic and public disputes are rare, however. And while experts say having a policy in place isn’t a guarantee against fallout from a name change, it can help nonprofit leaders, board members, fundraisers, and donors know exactly what to expect when negotiating such a gift.
“Guidelines in naming policies help organizations stick to their guns and have agreements that are reasonable and fair to them and to the donors,” says Ellis Carter, a lawyer who works with nonprofits and donors and has written about naming policies.
They can also help gift officers avoid making promises to donors that they can’t keep, Ms. Carter says.
If your organization is just starting to think about creating or formalizing a naming policy, get all of its leaders involved in discussing what to include, says Tiffani Shaw, chief operating officer of the University of Iowa Foundation. She suggests forming a committee of those leaders to reach a consensus on each point before making the policy final.
The policy should spell out what naming opportunities are on offer and what’s off-limits, says Ms. Shaw. It’s important, she adds, to think through how much your group can realistically expect to raise from each potential named asset. You should also determine the least someone would need to give for naming to be on the table, says Andrea Wagner, vice chancellor of Advancement, University of Colorado Denver.
It’s a good idea for fundraisers to review the policies before asking a wealthy donor for a big gift with a naming component, says Scott Rabenold, vice chancellor for development and alumni affairs at the University of Tennessee at Knoxville, which developed a naming policy in 2001 and has revised it several times since. “We all have a responsibility to make sure we understand these policies before entering into a significant dialogue,” he says.
Forever Is a Long Time
Ms. Carter’s checklist for writing a naming policy includes the following points:
-
Determine how long the naming rights of any gift will last, and be wary of promising donors their name will grace an asset forever. “Nonprofits sometimes get so excited to get the gift that they give too much away,” she says. “Perpetuity should only go along with a truly extraordinary dollar commitment.”
-
Make a list of all the ways donors can be recognized and where a donor’s name will appear.
-
Figure out how your organization will continue to publicly honor a contribution if a building or other asset named for a donor crumbles or is torn down someday.
-
Include provisions to protect your institution if a donor’s name is tarnished by scandal. Make sure you are able to remove the name of a donor who has broken the law or become publicly involved in something that could embarrass the organization or harm its reputation.
If a donor requests something you’re not comfortable with, the policy will give you a graceful way out, Ms. Wagner says. If that’s the case, be sure the donor knows how important the gift is to your organization and discuss other ways to recognize it.
