Episode 82: Naming Opportunities: What is their Real Intent?

Welcome to another edition of "Around with Randall," your weekly podcast making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett.

It's great to have you here with me, Randall on "Around with Randall." Today's conversation is around naming opportunities, and this has taken on kind of a life of its own over the last decade or so. It's become so important that in my daily looking around of news stories in the various publications I read, I came across an editorial about it from the Los Angeles Times. Nicholas Goldberg wrote an editorial in April that highlighted one of his recent experiences. He happened to be at the music center in downtown Los Angeles and was to take in a performance and like many of us had to find the restroom, and as he says in the editorial or the opinion piece, he walked to the restroom area and just stood and stared and had to contemplate the fact that the restroom's named for a family who made a gift in their support. And that brought him to a point where there was a lot of thought process around what are we doing here? Is this seem right? And then he went into all kinds of naming opportunities.

Naming opportunities in philanthropy is nothing new. If we think about one of the oldest institutions in our history, Harvard University was named afterJohn Harvard a few years after it had started as a very, very small school. I'm thinking about somewhere about 16346 based upon his bequest that he had left for the institution. What was interesting is what Goldberg began to do in terms of making connections. We think about naming opportunities in philanthropy in a very specific way. He went and did some research, which I think any good writer would do, and he began to equate it to things like the incredible dollars that are being driven into naming sports facilities, that you no longer see a name of a stadium or a name of an arena as the Omaha arena. Its CHI Center here in Omaha. Before that it was Century Link and that this naming has permeated society. He even found a newspaper story around the fact that a woman who was looking for some resources because she needed to do some things before a child was born actually put out on eBay the ability to name her child. It brings us to this interesting quandary. I think most of us in the nonprofit world would differentiate between the stewardship and the recognition that we do when we name something in honor of someone's charitable intent, and gifts versus what a football stadium is doing. Pick your favorite stadium around the United States, or arena, and what they do and we would probably even go one step further to say well one is marketing and the other is stewardship and recognition.

That led me to think a little bit, based on his writings, Mr. Goldberg's, to look a little bit deeper, found some other information from an a article going back a few years. Back in 2015 by Drew Lindsey in the Chronicle Philanthropy talked about naming opportunities and their elevated status with larger campaigns. The University of Rochester Medical Center through their new children's hospital at the time had 370 naming opportunities that were listed online for as little as $20,000, which was for the baby formula prep room all the way to $5 million or $5 million for the neonatal intensive care unit. Not to say that Rochester was right or wrong, but the University of Texas in their School of Engineering, as the article articulates, dangled naming opportunities for of nearly $60 million for its new 400,000 square foot facility. Fordham University School of Law had 250 naming opportunities.

And this gets us into a very interesting space in conversation, and I think about when I do this, about really about my friend and someone that I look up to and somebody that I have great respect for in this industry and that's Mr. David Flood at Intermountain, and he runs and oversees their philanthropic efforts. And he always used to say, and I think he still does, I haven't heard him say it in the last year or so or maybe two years is, we don't sell stuff. What we do is we recognize people for the gifts that they give.

But what we're finding is that naming opportunities is beginning to permeate our industry and I'm not here to say that they're bad because they don't believe that they are, but it does make us think about and question and probably should find interesting and appropriate ways to do it within the right process. One of my favorite words, let me give you a couple of other tangential thoughts, bigger picture items, and then we'll get into the tactical about some things maybe your organization should be considering when it thinks about naming opportunities.

Number one, I recently was doing a campaign feasibility study. I'd never asked this question. The question on in the feasibility qualitative interviews, which the client had requested, was would you ask about the appropriateness of naming opportunities? I've never done that. I thought well that's a good question, and to me it came in two forms. Number one, what was their personal vantage point? Person I'm interviewing. But number two would be what's their perception of the community's view of naming opportunities, because I wanted to capture both. It helped the organization, I think, really get a feeling on what the community felt. That will come back in the tactical because it's not that we're saying someone can't be anonymous. I think we all would agree if someone chooses to make their gift an anonymity we would respect that, and frankly makes it a lot easier, but it's donor intent and we should always be following that. But also, culturally, does the community like naming opportunities? Is it appropriate? And before I had placed that in the campaign feasibility study I'd never really asked or thought about that question, at least ask myself, does does putting your name on something, be is it looked at in the community, as a negative as if you're above everybody else? What I have found as I've begun to ask this question more more often, is there are some communities, and you can define community however you want. Maybe it's a small city, maybe it's this part of the city, maybe the community is it lists like health care for an example ,those in the healthcare arena maybe it's education, maybe it's your alumni base. Community can be defined in a lot of different ways, but the question becomes is community supportive of this?

The second thing that I think is important is the sense of permanency with naming. So a couple of examples. Many years ago I happened to attend, a great environment, but I went to a Nebraska Notre Dame football game at Notre Dame. And before the game a family was recognized and they helped raise the American flag and was announced that their name was being put on that building. It turns out that they didn't complete the gift, and I think it was a limestone or some kind of stone at, Notre Dame's campus is gorgeous, Notre Dame ended up having to take that name off the building. So there's the practical piece of, it's in stone, what are you going to do you fix it? I think about a situation that I'm dealing with now with another client in a campaign council situation where they have given the naming opportunity for a probably the largest piece of the campaign effort. In recognition of the gift, but they've limited it to 20 years because somebody figured that we might want to create another quote-unquote naming opportunity down the road, which led me to question his campaign council and at the end of the day it's their decision. I respect it, but I began to ask questions like, well is this truly stewardship? Is this more marketing? How do we look at this? And at the end of the day, I think the client really didn't care. They were like, it's okay, we're okay with this. And if they're okay with it, I'm okay with it, but is that really stewardship.

The third is the tragic situation and what we're going to talk about here in about 10 seconds is less than one tenth of one percent of the problem that everyone else was dealing with but dealing with the Sackler family. The Sacklers were the family who owned the formulaic rights to making Oxycodone, Oxy. And over the past five to seven years, maybe a little bit longer, there's been an enlightening in society of the problems that this drug has caused, and you've heard the stories i'm sure. But literally towns of 20,000 would be allocating through pharmacists or distributing through pharmacists enough Oxy to like be enough for an entire state for five years and so there's all these lawsuits, but at the center of them is the Sackler family, who owns the company who manufactures Oxycodone. They were very generous and their name is being pulled off of all of these naming opportunities, from universities to museums, and it's all over the place, which brings up the idea of morality and do you want certain names associated with you. Are there certain things where there's lines in the sand for the organization?

The last comment I'll make is actually right up my personal alley as someone who studied a great deal of tax law during law school. Are we getting to the point where the IRS might look at naming opportunities as having a fair market value? I'm not aware of any of decisions at this moment, at this time, or anything even in legislation or in the courts that would indicate that this is an issue. But I have read a couple law reviews as I was doing a little bit of thought on this subject and I've seen a couple quotes from law professors and and legal scholars who are saying, tell me what the difference is. The football stadium that has a $5 million a year naming opportunity for 20 years for XYZ corporation, an XYZ corporation giving $100 million dollars to a nonprofit and they name a building after it? Pretty good question, to be honest. Hadn't thought about it that way.

This goes back to philosophical thought processes, and I go back to someone I told you I admired and can't tell you how much I respect. It's David Flood. We don't sell stuff, that's not what we do. We build relationships. We indicate what our values are and what the needs are to make those values possible. The missions that we believe in and when somebody does something extraordinary we find ways of recognizing them in the process, but it's a fine line.

So what are the tactical things that you need to be aware of that probably can help you be ready for these moments, these challenges? So let's start at the top. Your organization has to have some type of agreement internally. I'm not even talking about anything externally yet, about what the values of naming opportunities are. And that's going to manifest itself in some type of policy. Obviously the advancement office, the development office, the foundation office is going to hold the right to that policy. But i have done this for too long. Many times if you have a supporting foundation they don't actually have any ownership inside the entity. So if it's a hospital or a university, the separate foundation that raises the money, they don't own any of that stuff so there has to be a collaborative approach with that other governing board. And even if you own all of it and it resides inside the philanthropic office, there are the tactical pieces inside that policy of where facilities falls in and what's the process for approval and all of this resonates from a board-level governance structure. What does the board think about all of this?

I don't think it's a good idea for the board to be insulated in its decision-making process, i.e they just make the decision, they don't take into account the implications for a fundraising office. Or, as we talked about a few minutes ago about the campaign feasibility study, what the community thinks. I think all of those are inputs but at the end of the day this needs to be a governance, strategic conversation that starts at the board. It's organizational buy-in across the entire platform of the organization and needs to be written in a policy as to what we believe in and what we do so there's very little wiggle room to make up stuff they made. The board may delegate, through the policy, the CEO, to make decisions like for a conference room but the policy will generate the overall value set that the organization has on this issue. So that's number one. There are tactical pieces about where facilities fits in and the planning and things of that nature that also should be fitted into that policy and those in those thoughts.

Number two is that there is a relationship like an olympic between cost and naming. If someone gives us five percent of a building we most likely are not going to name the building after that. I think one of the things that I have, I feel very strongly about and feel good about is that I've always pushed my clients. And when I was in practice and practicing the organizations I've believed in to kind of have a general rule. Our first goal should be to try to get to 50% of the cost of that particular area that we're talking about naming, meaning the gift should be moving towards not a hard number. Fifty percent of the cost. So if you're going to build a lobby it's a $1KM. The naming gift should be at least $500,000. If your organization believes in this philosophy now the more the dollars the bigger the cost the less the percentage so you get up to 100 million maybe it's 30 percent so it's a $30 million gift or $40M but that's an organizational conversation as well so that it lays a standard i do understand why places like as mentioned in the beginning Fordham and Rochester and Texas, and I'm not- technologies most of you are aware of but I understand it they're putting these on the internet and that's full disclosure that's their argument, and frankly it's a good one, but organizationally you have to be prepared to defend it. What is it we want to do and why do we want to do it? And cost should be an important component of this perspective. I would also add that not everything needs to be named. One of my favorite stories of naming in my own personal career was early on with the high school I worked at, Rockhurst, and the campaign we were going through and a gentleman wanted to name the dean's office. When we finally got down to it we found out why he said because I spent more time in the dean's office and I actually didn't class

that - didn't strike the CE0, president all that well. I'm not saying it's a good idea or a bad idea to name a dean's office, but I think you need as we started this whole thing off, do you really need to name the bathrooms? I think it's a worthy conversation. Not everything needs to be made and the other part is should you be naming for things, for people who do great service but don't give you a gift. My answer is yes, I don't think it should be done willy-nilly, should be organized but there's nothing wrong with naming something for a long time employee or leader who does spectacular work. That should also be part of the process.

Lastly, which very short, really encourage you to keep an eye on the idea of fair market value. If it's a company and they're doing this for marketing purposes, is there really a charitable intent? At the end of the day they have to figure that out but it's something in the nonprofit world we should be aware of, and it goes all the way back for the third time but David Flood always said still says, we don't sell stuff, naming opportunities, good thought process and conversation for your organization to have to make sure you get it right and to get it right for you, because there's a lot of wiggle room between the barriers to come up with a great decision on how you feel about it.

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