Naming rights for donations; how can charities mitigate the risks involved?

That is a question which, no doubt thankfully for some, no longer needs to be answered.  In May 2022, it was announced that the Sackler Gallery of the National Gallery would, after 30 years, revert to being called Room 34.  This was the result of an agreement between the National Gallery and the Dr Mortimer and Theresa Sackler Foundation.  It can be assumed that, in the past, the Foundation made a substantial grant or grants to the National Gallery and, as a condition, the National Gallery agreed to display the Sackler name on Room 34.

The National Gallery was not alone in removing the Sackler name.  The Sackler name used to be found in many major UK art institutions.  In March 2022, the British Museum and the Raymond and Beverly Sackler Foundation announced that the Sackler name would be removed from the British Museum.  In February 2022, the Tate removed signs for the Sackler Octagon Gallery, the Sackler escalator and Sackler lifts.

The likely reason behind the removal is the Sacklers’ involvement in the opioid crisis.  The crisis began in the 1990s and the key role of Purdue Pharma and the Sackler family in creating the crisis began to be recognised from the early 2000s.  We can speculate about why it took so long for the Sackler name to be removed.  It could be that it took a long time for the protest movement surrounding the opioid crisis to gather momentum and for sufficient pressure to be applied to such institutions to take action. Protests often start small and local, and it is only within recent years that devices like social media have been exploited to provide individuals within those protest movements with a voice, which amplifies their message such that it becomes audible to those at the top of these institutions.  But for charities, including museums, a particular reason they have been slow to react may be that donation agreements they signed precluded them from unilaterally removing the Sackler name.  The Smithsonian, for example, publicly announced that this was the case, in response to a request by a US Senator to remove Arthur Sackler’s name from one of its galleries.

But why, when decades have passed, would the Sacklers suddenly agree to allow major UK institutes to remove their name?  The catalyst is potentially the settlement agreed by Purdue Pharma and the Sackler family in February 2022.  The company and the family agreed, together, to pay $6 billion to settle various lawsuits brought by US states.  The family agreed to apologise to the victims of the crisis, a first following nearly 20 years of lawsuits.  It also, very relevantly, included an agreement that the Sacklers would allow institutions in the US to remove their name from buildings and academic programs.  The agreement may have prompted the various Sackler family foundations to drop any objection to the Sackler name being removed in the UK as well.

The fact that it took years, and the Sackler family finally accepting some blame, to remove their name illustrates the central problem facing charities if the name of a now disgraced donor is on their walls.  They want to distance themselves from the donor, but the terms on which they accepted funds preclude them from unilaterally removing the donor’s name.  The Sacklers are just one example of institutions and charities ending up in a difficult position when someone they accepted donations or sponsorship from is publicly named and shamed for their conduct.  There are other examples from recent years, Jimmy Savile being one.  Numerous institutions, including Stoke Mandeville Hospital, associated with him had to remove his name.  Streets and footpaths had to be renamed by local authorities.  The acknowledgement that Savile’s activities were widely known and, yet, institutions including the BBC were still willing to be associated with him is perhaps indicative that, in the past, there was a willingness to turn a blind eye to questionable or illegal conduct where money or fame was at stake.  Thankfully, that appears to be no more.  Charities and institutions now see that their reputation is more valuable than tainted money.  Charities may also be very wary of getting on the wrong side of a protest movement.

So what can a charity do?  How does a charity balance upholding their own moral standing and reputation against the need to attract donors by offering incentives such as naming rights?

First, ensure that proper due diligence is conducted before donations with naming rights are accepted.  This is something charities should do for every major donation but it has more pressing importance where naming rights are involved given the very public connection between the charity and the donor.  A donor operating in a potentially problematic industry,  who has expressed potentially inflammatory views or demonstrated potentially concerning conduct will be higher risk and, as a consequence, a greater level of due diligence into their business affairs and a more risk averse approach (both to naming rights and the decision to accept any donation from the individual) will be required.

Second, if naming rights must be a feature of the donation, consider whether the rights need to exist in perpetuity or ensure that the charity has the ability to remove the name unilaterally.  The difficulty is that either of these terms may be unpalatable to some donors. They might not like the idea that, despite having contributed vast sums, their name could later be removed.  There is a balance to be struck, but the charity has to look to protect its own interests and the interests of its beneficiaries, both of which may be tainted by association.  The charity’s interests have to be prioritised over the donor’s but balanced with the benefits which could be realised by accepting the donation.  A blanket policy limiting the term of such naming rights, such as the 20-year limit adopted by the Smithsonian in the wake of the Sackler scandal, may assist.  In that case, any discussion about limiting the term for naming rights will be based on policy not the reasons why the charity might not, in future, want to be associated with that particular donor.  A potentially very awkward discussion.

What about the case where naming rights have already been agreed and the donor is later disgraced?

The charity could seek to negotiate the removal with the donor.  Legal agreements can usually be varied by mutual agreement of the parties, including removal of the naming rights clause.  Most donors will be in a PR crisis.  They may welcome the opportunity to agree to the removal, rather than have another negative story about their refusal being circulated. However, not all donors will be willing to agree.  The Sacklers certainly were not initially.  Members of the family announced they would fight attempts by Tufts University to remove their name from its medical school.

If the donor refuses to agree, the options for a charity are very limited.  A business might seek to terminate or rescind the contract with the provider of funds.  Without the contract there is no obligation to provide the naming rights.  It is not so simple for charities.  Giving back funds or using funds raised from others where the original donation has been spent, is not necessarily applying those funds for a charity’s objects.  The Charity Commission’s permission (which is not likely to be forthcoming) would also be required for such a step.

A charity could simply accept the inevitable and resign itself to the donor’s name remaining as required by the grant agreement.  Or a charity could seek to contextualise and explain the reason why the name remains, perhaps through a PR campaign or signage explaining the circumstances in which the donation was given, the reason why it was not open to the charity simply to remove the donor’s name and the efforts made to seek removal.  The signs might also explain and acknowledge the acts that brought the donor into disrepute – making clear that the charity does not condone or support such acts.   Care would need to be taken to ensure that any signage did not offend any clauses of the donation agreement (e.g., confidentiality obligations) and that it did not defame the donor (in particular where allegations have been made but not yet proven), but it may be the only option for some charities.

This leads neatly on to the final twist in the tale.  As noted above, most art institutions have removed the Sackler name.  But, notably, the Royal Academy has retained the Dame Jillian Sackler Sculpture Gallery and the Jillian and Arthur M. Sackler Wing of Galleries.  This is potentially one of the last major public institutions which has retained the Sackler name.  Critically, the donations came from the family of Arthur Sackler, who died in 1986, well before Oxycontin came to market.  Therefore, from the Royal Academy’s perspective, the funds did not come from a source tainted by the opioid crisis.  The story is more nuanced than that, Arthur Sackler was, after all, the architect of the sales strategy which was so effectively used to create a demand for Valium (Mothers Little Helper) which tranquilised generations of Americans. This same strategy was adopted by his brothers and contributed to the widespread prescribing of Oxycontin.  But, it is fair to say Arthur Sackler is not in the same category as his brothers, Mortimer and Raymond.  Where a donor is tainted by association, as in this circumstance, a charity should consider contextualising and explaining the decision to retain the name, to make sure the public understands the charity’s reasoning.