University Business - May 2006 - (Page 74)

Gifts STRINGS What's in a Name? Potential Headaches S O M E DONORS WANT THEIR NAME IN BRIGHT with AT AT T A C H E D lights on a building forever. Others have deeply held personal reasons for keeping their name off of a gift. Although these requests seem easy to accommodate, neither is. In fact, name funds back. They may have taken the tax deduction, or they don't restrictions can bring on painful giving headaches. For one, name donors do not always bring credit to the in- want the money to go to their kids, Brody says. Moreover, she adds, stitution. The Kenneth L. Lay Chair in International Econom- if the university and donor agree to give the money to another char- ics at the University of Missouri-Columbia remains funded but ity, the university's trustees may very well have violated their fiduciary vacant; at press time, Lay was on trial for his role in the collapse responsibilities to the institution. of Enron Corporation. Princeton has never returned a gift in its 250-year history, says Queen's University in Kingston, Ontario, meanwhile, has university spokeswoman Cass Cliatt, but officials have often turned removed the name of former Hollinger International execu- money down. We certainly would not hold it against the donors if tive David Radler from a building, but it did not return his $1 they found another institution that could support their gifts, she says. million Canadian donation. He pleaded guilty to fraud and is That attitude dominating an IHE's approach to restricted gifts cooperating with investigators. There are concerns that both would serve it well, although few have the luxury of Princeton's re- Lay and Radler made the money for their donations through sources. The charity sometimes needs to be saved from itself, Brody improper activities. says, as gift officers have an enormous temptation to accept restricted When naming rights are among a gift's restrictions, Mike gifts to get credit for the money now and cross their fingers against Westfall, associate vice president for Advancement at Radford problems down the line. University Va. , says that a quick solution is to include a clause If the need and interest don't match, we need to be professionals revoking the name if the donor is convicted of a felony. That and walk away, Westfall says. As an organizational issue, institutional would have saved MU and Queen's from much controversy. leaders should ensure that development officers are not compensated in ways that create adverse incentives. Secret Givers Anonymity carries its own burdens. Sure, there's no embarrass- Harnessing Donors' Creativity ment if the donor ends up in prison, but there could well be Meeting gift restrictions may interfere with an institution's mission, repercussions if the donor's name is leaked. Gift offices need but they can also put the brainpower of alumni and friends to work. procedures to limit the number of people who know an anony- Sometimes the donor comes up with ideas that the institution hasn't mous donor's name, and all should understand the fiduciary thought of, says Brody. breach that goes with careless gossip or calculated disclosure. Westminster College has found just that. In If possible, the institution accepting an anonymous gift 1997, it approached a donor about a science should retain the right to disclose the donor if the anonymity building, but the donor wanted to ex- harms the university's reputation. A $35 million gift made to pand Westminster's aviation program. Princeton in 1961 was anonymous until 1973. At that point, The result was a $7.4 million dona- leaders of the gift's supporting foundation agreed to be named tion and the creation of a pilot train- to quell rumors that the funds had come from the Central ing program in addition to the aviation Intelligence Agency. That story was hurting the institution's management program that had long been Woodrow Wilson School of Public and International Affairs, in place. Without the donation, Michalko says, for which the gift funds had been earmarked. The school re- the existing program would have been shut down. portedly began having trouble attracting students and faculty, Thanks to the donor's vision, the college has a unique interfering with the good intentions behind the donation. major that attracts students. It's proof that gifts with strings State-supported institutions face an additional challenge on attached may well be worth unwrapping. donor anonymity, as open-records laws may require that the names of donors to government entities be disclosed. Donor agreements may have to specify that anonymity is respected Resources only to the extent that the law allows. One state, Colorado, explicitly protects the identity of un- Brookings Institution, www.brookings.edu named givers. The University of Colorado Foundation worked with legislators in that state to pass House Bill 1041 in 2005. It Council for Aid to Education, www.cae.org clarifies what information must be disclosed by a private foun- Supporting Advancement, dation related to a state-supported institution. Donor anonym- www.supportingadvancement.com ity is protected and proprietary fundraising information is shel- tered, while the information needed to assure accountability to Colorado's citizens remains available. 74 | May 2006 universitybusiness.com RestrctdGvg.indd 74 4/24/06 12:52:25 PM http://www.brookings.edu http://www.cae.org http://www.supportingadvancement.com

Table of Contents for the Digital Edition of University Business - May 2006

Contents
COLLEGE INDEX
COMPANY INDEX
ADVISORY BOARD
EDITOR'S NOTE
STATS WATCH
SENSE OF PLACE
PEOPLE WATCH
Viewpoint
Human Resources
Marketing
Community Colleges
State of Affairs
2006 Higher Education Consultants Guide
Where's the Beef?
Big Picture AV Planning
Gifts with Strings Attached
Internet Postage Is Here
Enrollment Management Grows Up
Steve Wozniak: Education Technology Champion
Business Technology
WHAT'S NEW
CALENDAR OF EVENTS
DIRECT CONNECT
END NOTE

University Business - May 2006