Naming Rights
/Naming rights are, in simplest terms, any form of promised public recognition for a charitable gift. But they are more commonly associated with large donations for buildings, fellowships, endowments and the like. The opportunity to see one’s name or a loved one’s legacy associated with a long-term charitable purpose can be extraordinarily enticing. There are naming opportunities at various levels. Capital campaigns often involve a menu of naming opportunities, from $100 to name a brick to millions to name an entire building, and all manner of options in between. Sometimes, donors seek out naming opportunities, and sometimes they are offered pro forma by the nonprofit as part of a particular fundraising campaign. Regardless, there are many long-term complications of having a donor name attached to a project that should be deeply considered early on.
What Exactly Are Naming Rights in Philanthropy?
The most obvious answer is that naming is a way to publicly recognize donors for their support of a project or organization. Though a building might be the most iconic naming opportunity, naming recognition can also be offered for operating and programmatic gifts, such as naming an event series or scholarship program.
But there’s more to it than that. Fundraisers offer naming rights not only because they appeal to major donors already in their orbit, but also because it helps to inspire other potential donors. Putting a recognizable or prestigious name on a facility or project can help to encourage others to give to that project, too. That’s why naming opportunities are often connected to what are called “leadership gifts.”
Leadership gifts are large donations that anchor or kickstart a fundraising campaign. For example, if a museum needs to construct a new building, it might launch the capital campaign by securing a leadership gift from one of its major supporters. This substantial contribution kicks off the capital campaign and inspires other donors to join in. In thanks for their large gift and their willingness to be the first or biggest donor to the project, the lead donor may be offered naming rights for the building. Other contributors to the capital campaign might then have opportunities to name spaces within the building, such as an auditorium, a wing or a meeting room.
Any time a donor’s name is officially affiliated with an organization or campaign, it enables the organization to leverage that donor’s reputation as fundraising continues. On the donor side, naming opportunities can be a powerful draw for funders who want to increase public perception of them as a charitable leader. Media and public attention to “reputation-washing” and “charity washing” is increasing, so donors should read more below to consider the pros and cons of giving anonymously, with high-profile recognition, or somewhere in between.
Pros and Cons of Naming
Attention, good and bad. A prominent naming opportunity can bring a lot of attention to you and your giving. Think about the pros and cons of both publicity and privacy, and what’s most important to you. A decade or two ago, major naming donations received fairly uniform praise, but media and social activists are increasingly scrutinizing the names placed on buildings and questioning the motives and the sources of donors’ wealth. You’ll want to think about the many ways this attention could play out, now and into the future.
Permanency of association. If you are making a major gift, it’s likely because you already have a strong relationship with the organization. If your gift will come with naming rights to a highly visible space, consider how you feel about being publicly affiliated with the organization. Are you proud to see your name attached to this organization? Do you have any reservations? Think this through before anyone etches your name on the side of a building.
Naming isn’t necessarily influence. Be clear about your expectations related to the naming opportunity. There are limits to the influence a donor can have on a nonprofit’s operations. If you expect certain things in exchange for your gift, make sure these are appropriate and clearly agreed upon with the nonprofit.
Size matters. How large a donation do you need to make for a naming opportunity? To name a building, you might be looking at millions (or hundreds of millions) of dollars. To name one brick, it could be $50 or $1,000. On any given capital project, there is usually a menu of naming opportunities at different levels. The low and high ends of this range depend on the organization, the size of the project or program, and other variables.
If you are a candidate for a substantial contribution, someone from the nonprofit may reach out to you to discuss other naming opportunities, and there would be room for negotiation and customization of the terms. A donation for naming rights will not match the exact cost of construction or the scholarship — or even the brick. Donations for naming also often cover some of the costs of endowing the program, maintaining the new building and so forth.
Tax deductibility. Some donors wonder if the positive effect on one’s reputation (a distinct benefit for the donor) has any impact on their ability to claim a charitable tax deduction. Naming rights alone don’t reduce the tax deduction associated with your gift because the IRS considers naming an “incidental and tenuous benefit” that does not violate the rules against self-dealing (i.e., giving in exchange for personal financial gain). But as always, it’s a good idea to consult with a tax or financial advisor to be certain about the implications of any gift agreement you make.
Naming agreements can get intense. It is common and reasonable for the nonprofit recipient to include a limit to the duration of naming rights. Being required to name a space after the same donor in perpetuity is a big ask. Buildings need to be renovated and sometimes, even demolished. Programs change. The nonprofit needs to keep raising money year after year, and naming opportunities are an important fundraising tool. The gift agreement will outline the duration of your naming rights.
It is also common for the gift agreement to include a morals clause stating that if the donor’s actions compromise the public trust or reputation of the organization, the organization has the right to remove their name or return the gift. Failure to pay a pledge is another reason your name could be removed.
Taking Action
If there is a naming opportunity with a nonprofit organization whose work aligns with your vision for the future, here are some tips:
Spend time discussing the gift and any terms or expectations with the recipient organization, especially if this will be a major donation.
A good fundraising professional will know a lot about your giving history beyond their organization and your net worth, and will try to move you to the most expansive vision and commitment you are able to make. Be aware of how flexible or specific you intend to be as the conversation evolves.
Discuss the timing of the gift. The recipient organization will want to agree on whether the gift will be paid all at once or in installments over time, and if those future payments are contingent on specific progress or other conditions. This is also a time to discuss whether the payments will be made in cash, appreciated stock or some other form.
All terms that are important to you should be clearly stated in the gift agreement. At a minimum, this should include the exact language for the naming — e.g., will it be the Maria Moore Scholarship or the Moore Family Scholarship Fund? Some gift agreements get as granular as specifying the size of the lettering or the placement of a plaque, whether the name will be painted or etched, and other details. (See also: IP’s “How Donors Decide” guide on gift agreements.) Be especially attentive to the wording of any morals clause and the length of term. The development representative should be able to explain why they use certain language in the agreement, and you should feel comfortable with the long-term relationship, as it may evolve over time.
Some nonprofits have a board-approved naming policy that guides all naming agreements. While you may have some room for negotiation and customization, there may be limits established by such a policy.
