The Art of the Naming
For donors and organizations alike, the negotiations of naming rights for a building or program can be a tricky process. Donors are protective of their investment while the organization must think through the long-term impact a naming may have. The following are a few tips to consider before sitting down in the conference room to negotiate:
- Donor Levels for Naming Rights: When an organization sets its sights too low, attracting a donor for a naming opportunity may be easier, but future donors expecting similar treatment could be a long-term ramification. On the other hand, donors should consider the likelihood that another donor may make a better offer someday that will entice the organization to try and renegotiate its arrangement.
- Naming in Perpetuity: The courts typically favor nonprofit charities if agreements like this are litigated, and perpetuity may seem to be over-reaching without some kind of recognition of its limitations and future changes. For the donor, consider limiting the term of the naming to allow an organization flexibility in the distant future. For the organization, consider different levels of support (5-year, 10-year, 20-year and 50-year naming rights) and whether there are any future actions by the donor that could negate the agreement.
- Specificity in Marketing: Some naming agreements are virtual binders of rules and regulations, with the exact font size and treatment of brand specified for every conceivable purpose. While this is traditionally the calling card of corporate naming negotiations, other charitable entities like family foundations can find themselves pondering appropriate expectations. A solid rule of thumb is to consider the “shelf life” of material – more permanent material and media relations should have expectations regarding the use of named entities. Blanket statements like “all materials” are typically difficult to enforce.
- Enforceability: Though agreements of this type are typically contracts and are construed as contracts, courts have so far favored charities. As with all contracts, clarity is the key.