Charitable Donations With Strings

(Credit: Thinkstock)

(Credit: Thinkstock)

feldman_amy Amy Feldman
Amy E. Feldman is a business commentator and legal business...
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By Amy E. Feldman

PHILADELPHIA (CBS) - Drexel University announced that it is going to take the name of a big donor off the door. Can it do that?

Five years ago, philanthropist Earl Mack gave $15 million to Drexel University, and the law school was named the Earl Mack School of Law. Drexel now wants a bigger donor to get naming rights. Mr. Mack has agreed. But it happens more frequently that a nonprofit chooses to remove a donor’s name where his name has become associated with some scandal.

After John du Pont was convicted of murder, Villanova University took his name off the basketball pavilion, and didn’t give him his money back. If you want to make sure that your money is used a certain way by a charity, can you?

In general, nonprofit law, contract law, and the laws on solicitations require that charities use money for the purpose for which it’s given. There are a lot of donors who want what they call a reverter clause in the agreement to give money: if you don’t rename the school, I have the right to get my money back. And you can do that, but most nonprofits are smart enough to add: unless you embarrass us, in which case we keep your money.

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