Donors Names on Buildings in Perpetuity- Is it Right?

Posted by 1 Nov, 2012

This issue came up yesterday at Prime Quadrant’s conference on “Today’s Opportunities Across The Asset Classes”. A donor approached me and said she did not think it right that she and her husband were being asked to raise funds for a building that carried the name of the original donor who is since deceased.  The cultural building is in need of an upgrade and she felt the original donor should not be reaping the rewards from current donors who were raising far more funds than the original gift.  She makes a good point.

While philanthropists have been giving to charitable causes for hundreds of years in Canada, it is only in recent years that formal donor agreements have really come into the mainstream. In the old days a donor was approached for support, perhaps there may have been a “gentleman’s agreement” on the gift amount and possibly on the type of recognition and that was that. There may not have been anything signed aside from the cheque and it was just expected the building would hold the original donor’s name in perpetuity.

Nowadays, we have become more sophisticated with philanthropic giving and most donors and organizations will insist on written agreements outlining the terms of the gift, including any recognition opportunities. I am sure you can think of many buildings that have changed names over the years, their purpose most likely remained the same, but as the needs to upgrade and expand facilities grow, new donors have had opportunity for recognition of their generous gifts as well as the original donors.  I think about the original O’Keefe Centre, subsequently named the Hummingbird Centre, then the Sony Centre. While it may take us a while to get used to the new names we are adaptable creatures and we all seem to figure it out in the end.

My advice to the donor was to chat with the current board chair of the organization and obtain some history about the original gift. If there was no agreement or one that did not specify the length of the building naming, then, with the board’s agreement, it should be possible to alter the name of the building if a current donor is willing to step up and make a substantial gift  that may warrant a name change.  There may also be a way to continue to recognize the original donor’s generous gift that allowed the building to be erected in the first place, such as a plaque in a prominent location.  If there are any heirs, it would be appropriate to advise them of the plans out of courtesy recognizing their family history with the organization. This would allow new donors the opportunity to have their gifts recognized in an appropriate manner as the need for new support and upgrades arise over the coming years.

My overall advice on this is if a donor wishes to make a substantial gift to a building or facility that may carry his/her name, it is good to have a written agreement with the charity that will set out the length of terms of the naming right, perhaps with a first right of refusal.  This will ensure appropriate recognition to the original donor but also allow for appropriate recognition of future donors.  Got a question on giving? Contact us at:info@philanthropic.ca

Categories : Terry Smith, Wealth Advisors

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