Accepting Donations Is Increasingly Complicated Business

While I have written about this before, of late it seems that the decision to accept a donation from someone is increasingly one requiring deliberation. An article on The Conversation lays out a case for either having a morals clause or time limits on any donation that involves naming rights.  Citing the number of non-profit arts, cultural and educational institutions who have refused to accept donations from the Sackler Family due to their ownership of opioid maker Perdue Pharmaceuticals, author Terri Lynn Helge notes it is easier to refuse a donation than to refund one.

As a nonprofit law scholar, I have seen that it’s much harder to sever prior arrangements with donors embroiled in scandals than it is to stop taking money from donors who are the object of public outrage.

[…]

When these scandals strike, charities face a dilemma – keep the money given by the now-tarnished donor or return the tainted funds. But returning the funds may be easier said than done.

Once the money is given away, it’s committed to charitable use. Returning that money just because the donor’s reputation is now sullied may get the charity in trouble with state regulators.

Helge mentions donations from Harvey Weinstein and Bill Cosby as cases where organizations began to experience negative perceptions of their brand and were faced with refusing a donation or making public statements distancing themselves from the donors.

Increasingly these are issues non-profits of any size need to consider as they accept and recognize donations from a variety of sources. Both returning the donation and grinning and bearing the bad publicity can be equally bad options:

They can give the money back, perhaps with interest. They can suspend programs or professorships named after the donors whose names have become an embarrassing burden, perhaps with threat of litigation from the donor for not fulfilling the charity’s end of the bargain. Or, they can continue to maintain the donor’s name and face public outrage.

[…]

Once the cost of doing nothing gets too high in the long run, charities may implement costly options to terminate the association.

That is why in my view, museums and other recipients of the drug-making family’s philanthropy could eventually redirect their donations. But that won’t happen until what they lose by honoring Sackler gift agreements becomes more exorbitant than satisfying all of the anti-Sackler movement’s demands.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)

I am currently the Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.

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2 thoughts on “Accepting Donations Is Increasingly Complicated Business”

  1. This is the same argument we (the arts) had back in the ’70s and ’80s about accepting money from Philip Morris or Exxon, to name just two. Quite frankly, I’m not sure that there is any money which is completely one hundred per cent “untarnished” in some way. Sorry to sound like a cynic!

    • Right, how could I forget about the Phillip Morris thing. If you want to talk about being cynical, I remember that so many dance companies were sponsored by Altria which is what the cigarette companies rebranded themselves as. It was hard not to think there was a co-dependent relationship since many dancers smoked to curb their appetites.

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