As Menu of Naming Rights Expands, Fundraisers Pitch Options Online

Take the online virtual tour of the new building that will soon house Golisano Children’s Hospital at the University of Rochester Medical Center and you’ll see lovely renderings, 3D animated views — and a good look at fundraising today. With a click on the interactive floor plans, lists of naming opportunities unfurl — some 370 in all, priced at $20,000 for a baby-formula prep room up to $5 million for the neonatal intensive care unit. The grand total: roughly $58 million.

Odd as it might seem to promote naming opportunities like real-estate agents sell homes, Rochester is not alone. In recent years, colleges, hospitals, museums, theaters, and even social-service charities have begun showcasing online their once-confidential inventories of naming opportunities. The Cockrell School of Engineering at the University of Texas at Austin is dangling online a naming opportunity of $60 million for a new 430,000-square-foot building. The Fordham University School of Law lists more than 250 naming opportunities online for its new building, noting “sold” by each that has been claimed by a donor.

Fundraisers say the practice is a natural evolution of the digital age, a handy supplement to traditional fundraising, and a victory for transparency.

Fundraiser or Salesman?

Critics, however, worry that it makes the naming gift seem more like a business transaction, and the fundraiser more like a salesman. “This looks very much like a commercial sale instead of a charitable gift,” says William Drennan, a charities and tax-law expert at Southern Illinois University School of Law. “It also highlights the Janus-faced role the charitable development officer is forced to play — hawking the naming rights one minute and then describing the purchase price as a donation or gift the next minute.”

The practice of honoring benefactors by bestowing institutions and buildings with their names is centuries old. Witness Harvard, Yale, and the Smithsonian. Modern fundraisers have aggressively expanded what can be named to include virtually every element of a capital project, from lobbies and staircases to benches and trees.

Until recently, however, naming opportunities were presented chiefly to those of appropriate wealth, and then only discreetly. A gift officer might give donors a folder with renderings and information about a capital project, then slip in a printed sheet of proposed gift amounts and related recognition.

Institutions generally regarded naming-gift asks to be confidential, sensitive, and proprietary. Fundraising consultant Terry Burton met with stiff resistance when he surveyed development officers for his 2008 book Naming Rights. “It was like pulling teeth,” he says. “A lot of times the vice president for advancement would say, ‘That’s private information’ and just slam the phone down.”

Why are once closely guarded asks now available through a few clicks? The trend is in part a byproduct of the digital age; donors expect to find giving details on the Internet, fundraisers explain. “Everybody goes to websites now for information,” says Mary Solomons, senior director of donor relations at Skidmore College in Saratoga Springs, N.Y. “We are used to accessing everything online, from our bank accounts to our reading materials. Why not have these marketing pieces online?”

When Skidmore recently launched a website for its campaign to build a new integrated sciences center, it posted naming opportunities online for the first time. Although not easy to find, the public list includes everything from the $25,000 minimum for a faculty office to the $25 million gift that will put someone’s name on the center. This range “gives people a sense of the scope of the project and where their gift might fit in,” Ms. Solomons says. “It shows that for as little as $25,000, someone can have their name on a building that will transform the campus.”

‘Complete Transparency’

Some development officers say posting naming opportunities does philanthropy a service by shining a light on a traditionally cloaked part of giving. For its campaign for a $25-million new building, the University of South Carolina College of Information and Communications illustrated the more than 90 spaces available for naming via interactive online floor plans. “We’re a communications school, and we were going for complete transparency,” says Elizabeth Quackenbush, senior director of development.

The approach has the added benefit of empowering donors, Ms. Quackenbush says. A professor at the school recently selected an office to name after careful study of the building’s floor plan.

The website is used for informational purposes, not marketing, she says. “I pull it up during my conservations with people to show them what is available. If they’re interested in, let’s say, a $25,000 naming opportunity, we’ll go to the site and see what’s available.”

Fordham University’s law school, which is raising money for a new building that opened in August, recently put its naming-rights inventory online to energize a fundraising effort that was nearly a decade old. The small development team could reach only a limited number of the school’s 17,000 alumni personally, says Vera Bullock, assistant dean for advancement, so it used email and direct mail to point potential donors to a website that housed a video, webcam images, and the list of naming opportunities.

The result? People stepped up who never would have been identified by research, Ms. Bullock says. “There were some six-figure gifts that came in as a result.”

Though some institutions balk at putting their top-dollar opportunity online, Fordham included the $25-million gift that would secure naming rights to the new structure itself. Naming rights for New York buildings go for considerably more, Ms. Bullock says. “We wanted to help spread the word that this opportunity was $25 million, not $50 million or $100 million.”

Like a Chinese Takeout Menu?

Not everyone in fundraising is comfortable with this new approach to naming opportunities. Lynne Wester, a North Carolina-based donor-relations consultant, says some capital campaign websites go too far. “What was a way to organize naming opportunities turns into a Bob Barker ‘Price Is Right’ game.”

Alan Hutson, a principal with the Richmond, Va.-based Monument Group, a consulting firm for nonprofits, applauds online inventories as experiments but says institutions would be better off presenting donors with a handful of gift options and promoting their impact. “Fundraising is best when it’s individualized and personalized,” he says. “My guess is that none of these organizations posted a list online intending it to be like a Chinese restaurant takeout menu. But they have kind of opened themselves up to that.”

Mr. Drennan of Southern Illinois University Law School argues that online inventories signal the birth of an informal commercial marketplace for charitable naming rights. The Internal Revenue Service should pay attention, he says. Since 1968, the agency has ruled that charitable naming rights have zero value; as a result, donors can fully deduct associated gifts, and the nonprofits cannot be taxed for the related income. But last fall, New York’s Lincoln Center announced it would pay $15 million to re-acquire the naming rights to its Avery Fisher Hall — effectively assigning a value to those rights. (The rights were later given to media mogul David Geffen for his $100 million gift.)

“This really puts the IRS argument to the test,” Mr. Drennan says. “I think it is completely within its authority to now say, ‘Naming rights have fair-market value, and you can’t deduct whatever that fair market value is.’ ”

Within philanthropy, many brush off the idea that naming rights have become a commercial commodity. Melissa Berman, head of Rockefeller Philanthropy Advisors, says naming gifts have long involved a transactional element, even in the era when the donors were Elihu Yale and John Harvard.

Ms. Berman’s firm tracks major naming-rights gifts nationwide to guide clients considering a naming gift. Those numbers are not used as a bargaining tool, she says, but to help donors gauge the impact of their potential gift.

“Donors are not looking at their gift as a purchase where they want to know exactly what the other car dealers are charging and what the Blue Book value is. But they do want a sense of the landscape so that they’re making a decision based on knowledge.”

Results Speak

Controversies aside, it’s hard to argue with the results. Golisano Children’s Hospital has netted more than $33 million through 122 naming gifts and looks as though it will reach its goal of $40 million.

Chief fundraiser Scott Rasmussen has no qualms about the nearly 400 naming opportunities loaded onto his capital-campaign website. “To me, it’s an evolution that’s been absolutely needed. I’m sort of an old dog; I’ve been doing this for 25 years. But I’m having a ton of fun with this website.”

Typically, Mr. Rasmussen says, potential donors take a hard-hat tour of the construction site, then explore naming opportunities on the website. On occasion, they call him for help. “I’ve done it from my kitchen on my tablet,” he says. “We go to the website, and I tell them, ‘Let’s poke around.’ "

Many times, the conversation ends with a commitment. “Right on the phone, people will say, “Oh, I like that; I’ll take it.”