Donors: Does A Namesake Matter for Businesses?
By Reagan Williams
(Source: UnSplash)
Have you ever wondered how much your name may be worth? Would you even want your name on a building? Then, how do people even get naming rights on a building? Back in January 2022, it was announced that Jeff Bezos' name will be added to the New Smithsonian’s National Air and Space Museum from a $200 million donation. The interesting fact is, it does not have an expiration date for 50 years. Bezos' name just won't be on the outside of the building, but utilized for a program for middle and high school students that promotes STEM education programs nationally. It will be called the Bezos Science and Technology Challenge.
An intriguing aspect of the terms of the agreement is the omission of a “morals clause.” Bezos is not subject to having his name removed from the Smithsonian, if his behavior was ever reprehensible. However, the Smithsonian Board of Regents did approve the naming scheme according to the gift agreement. Some members of the board include Vice President Kamala Harris, Supreme Court Justice John Roberts, and a few US Senators. According to the Smithsonian, Bezos did not seek out naming rights and is a part of the standard agreement with the size of the philanthropic gift.
In fact, does it really take millions of dollars to place your name on a building? Actually, philanthropy experts say that there are naming opportunities available each year which cost $25,000 to $50,000 (i.e., colleges, hospitals, social service agencies, and private schools). Some of these names are placed on individual rooms, scholarships, and dedicated programs with payments over a span of five years. The business of determining how much a name is worth is complex. It involves looking at what is being named, expenses, and the prominence of what is being named.
(Source: Pexels)
According to a major donation study, major donations with naming rights attached exceeded $4 billion in 2007. For instance, the study highlighted how naming rights deals on different businesses such as stadiums, have significantly increased. Sometimes donors become involved in naming controversies due to how people view them as individuals and their work. Does their name really carry goodwill in the public or is it motivated by business? It has become more common that naming rights are associated with donors versus highly regarded public figures. Donors realize they’re taking a risk by having their names in public, yet also acknowledge the personal and financial benefits.
Besides donors being linked to charitable work, there are reasons why they want naming rights. These reasons can be altruistic and good-intentioned from wanting to make a difference, create change for long-term improvements, and their legacy after they pass away. Now, the business aspect involves money. It makes sense for donors to donate significant amounts of money. The IRS in 1968 determined gifts do have naming provisions that can still be enforced and deducted from a person’s taxes. Mainly, people within the world of philanthropy feel that individuals should not question this rule due to the possible ramifications.
Despite the criticism Bezos has received and questions about his character, his donation can positively impact education and learning nationally. The Smithsonian has decided to use his name immediately. It is a non-profit predominantly funded by taxpayers. Regardless how people perceive the donation and naming, the Smithsonian is benefiting as well. It is able to expand and grow to impact more individuals. Philanthropists will continue to support organizations in their contributions while organizations will continue to accept money and give naming rights to remain operational. In the end, these types of donor relationships are mutually beneficial for each party involved.
(Source: Pexels)