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Can we protect naming rights in perpetuity?

Your Legal Questions Answered

Can we protect naming rights in perpetuity?

Do you have sample language for a pledge agreement for a charitable contribution that protects the donor’s naming rights so that, once named, a building/room/program cannot be renamed or "resold" in the future?

No.  I don’t know many charities that are likely to agree to it.

From the point of view of a charity, it doesn’t make much sense.  Certainly not for a physical facility.  Even if they don’t burn down or suffer some other major casualty, many of today’s buildings will be obsolete in 40 years, perhaps in 10 years in some high-tech situations.  To bring them up to then-current standards will require new money.  A charity thinking ahead will not want to foreclose a naming right for rehabilitation or reconstruction.

I talked recently with an academic fundraiser who said that a $1 million gift at his institution might get 10-year name protection.  A $20 million gift might get 20-year protection.  But there is no likelihood of perpetual naming rights at his institution, he said, because of the inevitable need to rehab or replace the facility.

Even for “programs” that are not likely to require such major capital investments, we recommend that the charity retain the right to remove the name in the event that something bad happens, like the donor being convicted of fraud, murder or supporting terrorists.  Promoting a program or a building named after a convicted felon might not be the most inspirational advertisement for the charity.

For more information on naming rights consider this text;

Naming Rights: Legacy Gifts and Corporate Money

By Terry Burton
In 2007 the sale of naming rights brought an estimated $4 billion in revenue to the nonprofit sector What slice of the pie did your organization enjoy? From transformational gifts to naming traditions to pricing strategies for capital campaigns, Naming Rights offers you a vivid collection of contemporary information that your organization can use today. Can your development team quickly pull together an accurate benchmark report? Learn how to benchmark and compete with peer organizations for buildings, spaces, and named endowments. Setting the ask amounts for your naming opportunities is critical to closing the deal. Are you ready?

Tuesday, May 17, 2016

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