Donors, Nonprofits Get Creative With Use of Naming Rights

With robust stock market returns boosting the size of many philanthropic gifts and hard-pressed nonprofits looking for new ways to raise funds, both donors and beneficiaries are becoming creative in their use of naming rights, the reports.

In the United States, where it is not unusual for donors to seek public recognition for their generosity, offering naming rights — not only for buildings but for things like atria, escalators, prizes, lecture series, scholarships, and professorships — has become an increasingly popular way of attracting larger gifts. Indeed, William Drennan, a law professor at , argues that tiered pricing models for naming rights —$10 million to name a building, $5 million for an atrium, $2.5 million for a students' common room — have created a new kind of philanthropic class system. "The mid-1990s was really the revolution," Drennan told the FT. "Before then, the wealthy were content to make their big donations to be on the board of directors. Now, the wealthy donor wants everyone in the community to know they're generous and powerful."

But while granting naming rights can be a useful fundraising tool, the practice is not without its perils — for both donors and beneficiaries. A donor, for example, may fail to deliver the funds pledged at the time of the naming, just as an institution associated with a donor may become embroiled in scandal. And then there's the always tricky question of what to do when a building named for a donor many years earlier needs major renovations requiring new sources of funding.

One charity that has taken a different approach to naming rights is the , a community organization in North Carolina that serves homeless people and allows donors to make small donations in return for the right to put their name on everything from dental floss (for $3) to a teddy bear ($30) to a bunk bed ($250). Since it was launched last November, the campaign has raised $56,000 for the organization, but the campaign — whose slogan is "This is just stuff. Until you don't have it" — is also aimed at raising awareness of the plight of homeless people and what it really means to go without the basics of life.

"We wanted to find a tool to help us educate people on homelessness and raise money in a creative way," said the organization's executive director, Patrice Nelson. "It's about helping people understand the essence of going without basic needs."

Sarah Murray. "." Financial Times 09/19/2014.