Naming rights may be the most valuable asset a nonprofit organization holds as the altruistically inclined super rich trade millions for name recognition. Many of the donation agreements call for the name to stick in perpetuity but the reality of the situation is often muddled. A cash strapped charitable organization is unlikely to turn down a major donation in order to preserve the name of a donor from decades before. In some instances, the descendants of the original donor have had the donation returned to allow the charity to free up the naming rights to bring in new benefactors. As a result of this trend, commentators have suggested charities drop the perpetuity promise for naming rights and admit that future conditions may require adding a new name or dropping the old one in order to preserve the organization. While current donors might not like such a change, dropping perpetuity agreements would allow greater flexibility in the future and ensure charitable intent will not die for lack of resources.
See Doug White, No Gift Should Be a Suicide Pact — So Drop the Perpetuity Idea, Chronicle of Philanthropy, August 24, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
