Naming Rights: How Long is too Long?

I saw a fascinating article in the NYT last week about the naming issues surrounding a major gift. (“College will get $20 million, if it changes its name,” New York Times, August 18, 2015, p. A18.) The article focuses upon a donor who is offering a $20 million gift to a college, with the requirement that the school add her name to its official name — in perpetuity, presumably. Thus, Paul Smith’s College may become the Joan Weill-Paul Smith’s College. Should a 75-year-old institution change its name in exchange for a $20 million gift? Well, we’ll let the college’s trustees struggle with that issue. What I found of greater interest was that the founder of the college had his own directive: He required that the college be “forever known” as Paul Smith’s College of Arts and Sciences. Thus, to honor the stipulation of the present donor, it appears the trustees will need to violate the promise made to the founding donor.

In our work, we find that naming something in perpetuity is rarely a good thing. It turns out that perpetuity is a long time. You get a better idea of this problem when you remember that Lincoln Center paid the Avery Fisher family $15 million so it could re-sell the naming rights to Avery Fisher Hall to David Geffen for $100 million. Naming rights for 50 years is often enough benefit for the donor and doesn’t handcuff the nonprofit forever and ever, which is what perpetuity turns out to be.