A Gift By Any Other Name
August 02, 2021 | Emily Koons Jae
Donors—and nonprofits—had cause to celebrate this June when the Supreme Court upheld donor privacy. In the 6-3 decision, Americans for Prosperity Foundation v. Bonta, the court struck down a California law requiring nonprofit organizations to provide the state with a list of their donors’ names and addresses.
The American Council of Trustees and Alumni (ACTA) applauds the decision. Though the court’s vote fell along ideological lines, support for the plaintiff came from a broad and diverse base. Hundreds of nonprofits—including the U.S. Chamber of Commerce, the Cato Institute, and the NAACP Legal Defense and Educational Fund—submitted amicus briefs advocating for donor privacy.
Forcing nonprofits to disclose a list of their donors could have a chilling effect on giving, as many donors prefer to keep their giving private. “Anonymous” can be found at the top of donor rolls for nearly every nonprofit, including colleges and universities. Indeed, earlier this year, anonymous donors gave $550 million to Western Michigan University—the largest single donation in history to an American public university.
Choosing to remain anonymous has its strategic benefits, beyond keeping a donor’s name out of the headlines. Philanthropists who wish to provide “seed funding” can leave naming rights open for another donor in order to attract additional investors.
For other donors, naming rights are of paramount importance to their giving. Many choose to name their donation in honor of a loved one or to imprint their legacy at an institution they hold dear. Higher education affords nearly endless naming opportunities—faculty chairs, fellowships, scholarships, buildings, and classrooms, to name a few.
A gift by a high-profile name may bring attention to a program that alumni are unaware of. At my own alma mater, Davidson College, NBA star Stephen Curry and his wife Ayesha made a gift to Lula Bell’s Resource Center, a space on campus where students can find food, textbooks, hygiene products, winter coats, and professional clothing. The couple’s gift brought the work of the resource center to the attention of other Davidson alumni.
Donors who choose to retain naming rights should make certain that their gift agreement clearly spells out the finer details. Moreover, all named donors should retain the right to withdraw their name at their discretion.
A naming rights clause in a gift agreement should answer the following questions:
- How and when will the university announce the gift and its naming?
- Will the donor be able to review and approve this announcement?
- Where will the university display the name, either on campus or in publications?
- What circumstances would cause the donor or institution to revoke the name?
- If the name is changed, would the funds remain at the university or be returned to the donor or foundation?
Ultimately, when deciding whether to attach their name to a donation, donors should consider their philanthropic goals. There are strategic advantages both to anonymous giving and to disclosing your identity. Whatever you decide, it should be a personal choice and not a government mandate. Most states, in fact, do not require as extensive of a disclosure as California tried to implement. The Supreme Court’s ruling brings California back in alignment with widely accepted protections of donor privacy and ensures that donors have the option to serve behind the scenes.