DBTC Law Firm

What’s In A Name?

Charities often attract gifts from wealthy donors by agreeing that a building, facility or program will carry the donor’s name. What happens, however, if that donor’s name subsequently becomes tarnished and the charity wishes to remove it? Vanderbilt University was required to repay an 83-year-old donation of $50,000 in present day dollars – to the tune of $1.2 million – in order to remove the word “Confederate” from the name of a building on its campus. The lesson: granting naming rights should be carefully scrutinized and the retention of “un-naming” rights under the gift agreement should be considered.

The issue of naming rights may become a concern if a major donor is accused or convicted of a crime, declares bankruptcy, or is engaged in nefarious activities with which a charity does not wish to be associated. However, unless “un-naming” rights are preserved, the removal of a donor’s name may not be as easy as removing letters from a building facade. The donor may be able to insist that the name cannot be changed or, if it is, that the contribution be returned.

Vanderbilt University learned this when a Tennessee appeals court ruled that the University could change the name of a building known as “Confederate Memorial Hall” only if it returned to the donor the value – as adjusted by the consumer price index – of the original contribution. In 1933, the United Daughters of the Confederacy (“UDC”) had contributed $50,000 to the George Peabody College for Teachers for the construction of a building. The contract required the building be named “Confederate Memorial Hall.” Peabody College merged into Vanderbilt in 1979, and Vanderbilt assumed all of Peabody’s obligations. The building’s name, etched in stone above its entrance, became controversial over the ensuing years, and Vanderbilt expressed its intent to remove the name. The UDC filed suit, alleging that renaming the building would be a breach of contract. The court ruled in favor of the UDC, holding that the obligation to retain the name continues for as long as the building stands and that if Vanderbilt desired to rename the building, it would be obligated to repay the UDC the value of the original gift in today’s dollars. Tennessee Division of the United Daughters of the Confederacy v. Vanderbilt University, 174 S.W.3d 98 (Tenn. App. 2005).

Ten years after the Tennessee court’s decision was handed down, Vanderbilt decided that would repay the donation – now valued at $1.2 million – and rename the building. The University’s chancellor said that the name was “a symbol that is, for many people, deeply offensive and painful.” The UDC, though disappointed with Vanderbilt’s decision, said that it had no legal choice except to accept the $1.2 million.

There are other examples of institutions attempting to walk-back naming rights. At Villanova University, for example, the “John E. DuPont Pavilion” was re-named the “Pavilion” after DuPont (the great, great grandson of the original E. I. DuPont de Nemours) was convicted of murdering former Olympic wrestler David Schultz. After the namesake of its recreation center was sent to federal prison for bankruptcy fraud and money laundering, Seton Hall’s Board of Regents adopted a new naming policy which allows for the removal of names from facilities. The Houston Astros baseball club had to pay bankrupt Enron Corporation $2.1 million to remove the Enron name from its stadium, which is now known as Minute Maid Park. The Baltimore Ravens and the Tennessee Titans have also gone to court to reclaim naming rights to their stadiums after their donors went bankrupt.

The University of Arkansas and other institutions around this state have proudly named buildings and facilities after their donors – Reynolds Razorback Stadium, Bud Walton Arena, the Walton Arts Center, and the Verizon Arena come readily to mind. If, in the future, a wayward heir or a financial collapse were to sully one of those donor’s names or businesses, could the name be removed? Perhaps not, unless “un-naming” rights were reserved in the contract. Donors and donees, take note and draft accordingly!

* Source material for this post gathered from Robert L. Fox’s article “Vanderbilt University Pays $1.2 Million to Donor to Rename ‘Confederate Memorial Hall’” published by the Planned Giving Design Center on its website, www.pgdc.com.

 

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