The President Must Stay
(Added 10/01/2018)
A few years ago we received a large outright gift to name a program, which because of its size we consider a planned gift. It came with an unwritten but well understood request: the president of our organization had to stay for at least ten years after the gift was made. My organization couldn't fire him and he couldn't voluntarily leave. At the time, the president, who was involved in the solicitation of the gift but surprised at the request, said "Sure, why not?" As circumstances would have it, he recently said he was leaving to lead another organization. When my boss, the development director, reminded him of the donors' desires, he almost laughed it off, saying they weren't really serious. Well, we've learned that they were. They haven't asked for their money back — yet — but they are not happy and we have a very uncomfortable situation on our hands. How can we handle this?
As with many bad outcomes, this one seems to have been born of a bad decision at the outset. No charity should ever accept a gift on a condition it cannot —or might not be able to — fulfill.
While many gifts are appropriately made in honor of an employee — a president or a janitor, or anyone in between on the pay scale — there should never be a requirement of the employee. Bland as it sounds, the gift could have honored the president without any strings attached as a way to thank him for his service. Acknowledging in writing at the time of the transaction that the validity of a gift in honor of someone is separate from whatever the person does would protect the charity. Keep in mind that you also want to be free, if it's warranted, to fire the president.
Technically, one might say you have no problem. The request was only oral and so the donors don't have anything to take to court. You could simply say to yourselves that you have the money and give up any future relationship with the donors.
Ethical dilemmas, however, often turn not on technicalities but on values and deciding which values in a given situation are higher than others.
With that in mind, you could begin the arduous task of winning back the donors, or at least of trying to keep feelings from getting worse. In fact, you had no control over the president's decision. Your mistake was to accept the gift with that condition attached. What keeps you from going to the donors to tell them you made a grave error — that you have learned from this experience and that their gift, as well as the president's service, even if it terminated earlier than anyone other than the president wanted, has helped the organization to do its work over the last several years? It may not win them back but it's worth trying. Donors tend to be remarkably sympathetic when confronted with honesty and humility.
To your unasked question: Yes, you could offer to give the money back. I would. Even though they haven't asked for it back, you would be wise to proactively voice the possibility and not let it hang in the air. They should not have to initiate that discussion. Also, they should know that you are not afraid of trying to assuage an uncomfortable situation.