Morals Clause
(Added 5/11/2010)
We have a donor who has publicly disgraced himself. He has been accused of stealing and the local papers have gone wild. Six years ago, he made a substantial gift to our organization - several million dollars - in exchange for our naming a building after him. Now, most members of our board want to remove his name from the building. One board member, an attorney, however, says we can't do that - the original gift agreement says nothing about such an eventuality, and so the donor has the right to keep the name on the building. The rest of the board thinks that if his name associated with us, it will make us look bad. What should we do?
You need to be more careful when writing those gift agreements. The idea of donors' rights has grown over the past several years and will probably always be with us. And it should be. Charities need to honor the promises they make to donors; if they can't, they shouldn't make the promise to begin with. The problem is, we don't know what will happen in the future.
On one level, should the donor object to his name being removed (although he very well might not), this is for a court to decide, or at least for two attorneys to try to find an amicable legal solution. But why go there if you don't have to? As I say, the donor may be willing to go along with removing his name from the building. Even though he may be a crook, he may still want the best for the charity.
One nuance to keep in mind here (some might think of it as a tiny, insignificant detail) is that he has not been convicted of anything - only indicted. While the papers are going wild, he has the right to a presumption of innocence, a legal right in court and a moral one from the public, which would include you. At the very least, I would wait until the conclusion of the legal proceedings.
But what if he is found guilty? Or what if he isn't, but his reputation is so tarnished you don't want anything to do with him? He might want to rely on the gift agreement that said you would name the building in exchange for his money. No exceptions. You might want to see what your legal options are in the case, but an attorney in New York tells me that he thinks there aren't many. That is, you could be stuck.
The answer, of course, is to build this eventuality into the gift agreement: If the donor is ever found guilty merely accused might be too harsh, but that's the charity's call - then the charity has the option of unilaterally removing the donor's name. And that wouldn't be just for a building; it could be for anything that has a donor's name on it, including an endowed fund.
But to the board members who are so sure of themselves about staying clean: How would they feel about returning those millions of dollars? As it stands, from what I infer in your question, the board appears to want the best of both worlds, to cleanse its reputation without any sacrifice. Telling your community that you wash your hands of a scoundrel is one thing; to back that up by invading your bank account is quite another - and a stronger - statement.