The CEO of your non-profit has accepted a major gift for your capital campaign from a local business. She and the president of the company shook hands on it, agreed that the donor’s name would go on the new facility, and the company issued the cheque. Just before the name is to be put on the building in time for the official opening, the CEO learns that the company has been convicted of fraudulent business practices. The board decides to reject the name for the building. However, the company’s president insists on the non-profit keeping its promise, saying the handshake agreement was the only agreement and the board had no policy on rejecting gifts. A judge sides with the company.
A university accepts a gift for one of its faculties to help build new space, and enters into an agreement to name a particular room after the donor. The donor is recognized with a plaque outside the room. Several years later, the dean of the faculty decides to redevelop the space, and raises new capital from donors who are recognized by naming the new space after them. When the original donor discovers his name has been removed from the space, he sues the university and demands his gift back, producing the original gift agreement that called for consultation with him should the space be redeveloped.
In both of these cases, those accepting the gifts didn’t pay enough attention to written agreements and policies.
In the first case, without a signed gift agreement that included a morals or ethics clause, the non-profit doesn’t have the right to reject the gift or the naming. So it’s critical to have gift agreements that say something like: “The Donor understands that the reputation of the (organization) cannot be associated with any immoral or unethical activities, or activities which display a lack of integrity.”
In the second case, the dean and the university didn’t abide by the signed gift agreement, and the donor was well within his rights to demand his gift back.
In the absence of a signed gift agreement, it’s important that a robust gift acceptance policy be in place, which will protect the organization and be transparent to prospective donors. Have the policy and any gift agreements reviewed by legal counsel. It’s worth the investment.
