Major Gifts and Naming Opportunities: When Giving Becomes Leading

This guide aims to help both emerging and established philanthropists to think about the different aspects of making a naming gift or any major gift with defining impact.


A major gift is a creative act鈥 an opportunity for a funder to transform an institution or catalyze a new stage of growth for an organization.

Many donors have supported the charities they care about for years, providing support to their alma maters, local cultural institutions or other groups. The donations provide an important source of flexible, reliable funding for the organizations. And when the organizations are ready to take on bigger projects, such as new construction or creating an endowment, they turn to their most loyal supporters for leadership gifts.

For donors, this is often welcome news. The cause they care about is growing. But it can also leave the donor daunted by the new responsibility. After all, providing several thousand dollars to an operating budget is one thing, but providing many times that amount to a capital campaign, and maybe having your name put on the building, is another.

This guide, part of the Philanthropy Roadmap series, aims to help both emerging and established philanthropists to think about the different aspects of making a naming gift or any major gift with defining impact.

They said, 鈥榃e鈥檇 like you to be the lead gift and give us $100 million and we鈥檇 like to rename the main branch after you.' I said, 鈥楾hat sounds pretty good.鈥 - Stephen A. Schwarzman, on being the namesake of the main branch of the New York Public Library

Types of Major Gifts

Types of Major Gifts

Donors often restrict major gifts so that they will be used in a particular way. This clearly defined purpose, along with the size of the gift, differentiates this kind of support from most annual giving.

Donors usually negotiate these gifts with the board and staff of the organizations they support. These negotiations, if successful, usually lead to a written agreement.

Leadership Gifts

Leadership gifts are significant gifts that help nonprofits anchor capital or endowment campaigns. Organizations often publicize these gifts as a way to validate their fundraising efforts, to build momentum and to recruit other donors.

Naming Opportunities

These often stem from capital projects like creating a new facility for a charitable organization, but they also can arise in other forms, including sponsorships, dedicated scholarships and endowed professorships.

Endowments and Endowment-like Investments

When donors want to give a gift that keeps on giving, they sometimes help create an investment fund that offers a reliable source of income to an organization. (These are usually organizations with staying power and a proven track record of service and fundraising capacity.) In traditional approaches, the corpus of the gift remains untouched while investment returns are used as income for the organization. However, some limited term endowment-like investments are meant to deliver income as the gift itself is drawn down over a specific time period.

Planned Gifts

Some of the biggest gifts nonprofits receive come from bequests. These can be restricted or unrestricted. They can fund capital campaigns or endowments and can also be connected to naming opportunities.

Key Questions to Consider

Key Questions to Consider

Donors at this level not only contribute to social and environmental change, they catalyze it. They set an example and bring other donors to the cause, helping to bring something new into the world. Their giving is much more than generous, it is generative.

But such promise begs an important question: how can philanthropists direct their major gifts so impact best matches inspiration鈥攎aximizing potential and minimizing risk? In essence, what are the key questions to consider when first considering a gift of this significance?

Here is a list of questions that can inform and guide decisions around making such a gift:

  1. Does the project seem achievable? Does it fit with your understanding of the institution?
  2. How deep is your relationship with the potential grantee? How have you found the experience of working with them?
  3. What is the organization’s capacity to deliver on the project? Do they have the leadership, staff and community support required?
  4. How do you see your role? What sort of public profile do you want? What involvement with the fundraising campaign do you seek, if any? What portion of the project will your gift cover? Do you have clear agreement on terms and conditions, including payment schedule, milestones, acknowledgment, input?
  5. What are the longer term effects for you as a donor?

Question 1

Does the project seem achievable?

When a philanthropist considers a leadership gift for a cause or organization, it鈥檚 natural to focus on specifics鈥攖he architect鈥檚 plans for the new building, the parts of the community to be served, the potential returns an endowment might deliver to a favorite organization.

But such specifics can actually cloud decision-making. A naming gift, like all major gifts, is first and foremost a vote of confidence in an organization and the project it seeks to create.

Donors must make a judgment call on a few key questions:

Is the project viable and, if so, what is the best way to pursue it?

Is it aligned with the mission and strategic priorities of the organization?

Will it strengthen and/or transform the institution?聽

There are many factors that go into a successful project, including strong strategy and leadership, adequate staff and volunteer resources, a demonstrable need and a good plan for addressing that need and, of course, fundraising capability. The donor, together with her advisors, must evaluate the project鈥攏ot just in light of the impact it hopes to make, but in terms of the impact it鈥檚 likely to make.

Major gifts help turn inspiring plans into reality. And certainly, the details of design deserve close scrutiny. But the most fundamental questions鈥攈ow, when and why鈥攐ften drive the best giving strategy.

Question 2

How deep is your relationship with the potential grantee?

The need is strong. The project, exciting. The timing, ideal.

Under these circumstances, it鈥檚 understandable that you might feel compelled to say yes to a naming gift.

That鈥檚 exactly why it鈥檚 a good time to think about your main partner or partners in the proposed endeavor.

Have you just discovered the organization? Have you known them for years?

What do you think they need? What do they think they need? Do these answers differ and, if so, what does that say about a potential perceptual divide or the promise of synergy?

Donors may want to take a few deep breaths and mine their own experience. (How has the organization treated you?) Part of a nonprofit鈥檚 success is the way it demonstrates stewardship with its donors. (How would you describe the relationship? Can you imagine how it will be five or 10 or even 20 years down the road? Where do you feel confident? Where do you feel vulnerable?) Your intuitive sense of things is a valuable tool as you evaluate opportunities.

How do you feel about the organization鈥檚 communications?

Is there a strong dialogue with donors? Do you feel part of the team?

Is your relationship with the organization deep enough to sustain your commitment if the leadership changes?

And what about the people who receive the organization鈥檚 services or products鈥攚hat do they think of the organization?

A naming gift is not unlike a marriage. It usually hinges on the relationship you have with your partner鈥攁nd that relationship can mean the difference between a major headache and a major milestone in life. It is important to ask questions about how this fits into your own life, such as:

How will your family members feel about this gift?聽

Is this a part of what you envision for your family’s legacy?聽

Question 3

What is the organization’s capacity to deliver?

A stunning architectural design for a cutting-edge research center is useless if the charitable organization behind the project cannot raise the requisite amount of money for its construction.

A new community health clinic may never get the chance to succeed if the new building does not have funds to pay its staff or even the heating bill.

To bring a capital project to completion, a number of factors come into play:

An organization’s history

Its financial status and reputation

Its endowment and fundraising ability

Its management, board, staff and administration

Its expertise or ability to get the necessary expertise to execute

External factors such as the state of the economy or community support also can be influential. It鈥檚 worth noting, too, that sometimes the stress and work of fundraising for a special project can pull an agency away from performing its core mission.

That鈥檚 why preliminary and expert analysis can save disappointment later. A management review done by an expert third party can reveal strengths and weaknesses of the organization. Consulting with outside experts in the field can show how the proposed project itself is viewed. Nonprofit organizations often conduct their own feasibility studies for major campaigns. There is no reason why a philanthropist could not conduct his or her own feasibility study for a leadership gift or have access to the organization鈥檚 own planning documents as part of their due diligence.

Gifts are finite, but their effectiveness depends on the ongoing ability of an organization to execute. With so much at stake, donors benefit from asking hard questions about capacity and having access to quality analysis and information to guide their decisions.

Donors will do what鈥檚 in their enlightened self-interest and in their heart.
- John C. Malone

Question 4

How do you see your role?

Naming gifts鈥攁nd other gifts of similar magnitude鈥攔arely stand alone.

Philanthropists usually need donor partners in order to move a project from the idea stage to reality. The recruitment of these partners is rewarding work, but donors should be clear on whether or not they see such advocacy as part of their involvement.

Beyond the gift, donors may ask: what else does the grantee expect?

Charitable organizations often seek leadership gifts in the early, 鈥渜uiet鈥 phase of a campaign so they can build 20 to 30 percent of the commitments they need before they go public. Early leadership gifts encourage smaller donors while building momentum. They show vision and faith in the project.

Many donors like the idea of motivating others to support a significant new project. They see their public support as part of what they can contribute. They don鈥檛 mind pitching their peers because they believe so strongly in the cause.

Others dislike the limelight and wish to give anonymously.

Still others are happy to have some public recognition, but do not like an active role in fundraising. For them, giving is enough on its own.

There is no wrong way to give, of course. But clarity on what role you want can help you guide the expectation of the organization you support. No matter your style of giving, your major gift conveys a strong vote of confidence in the mission, staff and volunteers of the organization. This support, whether high-profile or anonymous, is often almost as important as the dollars that get the job done.

Question 5

What are the longer term effects for the donor?

Donors who contribute to an endowment or a building are betting on the long-term existence of the organization.

They are also creating a long-term relationship with that organization.

Here鈥檚 one example:

In the 1980s, a private foundation offered a $30 million challenge grant to help build a $100 million medical research and treatment facility. The foundation鈥檚 name became part of the name of the center and both sides of the philanthropic equation were happy. About 25 years later, the medical center launched a new $1 billion capital campaign and asked the foundation for additional support 鈥 even though the foundation鈥檚 program priorities had changed. With the foundation鈥檚 name on the medical center, the foundation felt obliged to contribute and gave $10 million more.

Of course, the longest lasting impact for the donor is the philanthropic legacy a leadership gift creates. In the 21st century, Andrew Carnegie is known more for funding the construction of 1,600 libraries than for the way he amassed his fortune. Though his impact in the steel industry was undeniable, his enduring fame is as a philanthropist who had the foresight to make knowledge available to all.

Ten Readiness Factors

Ten Readiness Factors: A Preliminary Checklist

Philanthropists often look to peers for guidance. This checklist came from suggestions by experienced donors for a GrantCraft publication on endowments. The factors sum up key organizational and financial indicators. Though the focus was on readiness to create and operate an endowment, the list works well as a guide for evaluating any charitable organization being considered for a leadership gift. These donors look for:

  1. Outstanding performance, including a track record of adapting to changing needs in the field over time
  2. Strong leadership and experienced management
  3. An active and diverse board that truly governs the organization
  4. A history of at least one successful leadership transition and board succession
  5. Financial stability during several previous years, with income at least equaling expenses
  6. Fiscal accountability, with annual outside audits
  7. A diversified base of support
  8. Evidence of board and staff commitment to the project
  9. Sufficient staff and other capacities to carry out project fundraising and continue raising core support
  10. The potential to raise matching support from other donors

Naming Opportunity Fundamentals

Naming Opportunity Fundamentals

A lead naming gift usually does not reflect the full cost of the proposed project. With buildings, this kind of gift can vary from 25 to 65 percent of the costs, depending on a number of factors, including intangibles such as a donor鈥檚 willingness and capacity to give.

Many parts of a building can be used as additional naming opportunities. These naming opportunities can be priced at above their actual cost. The reason? These gifts often fund the cost of managing and maintaining the building as well as its construction.

Different nonprofits have different formulas for deciding how much money it takes to name a certain area. They include square footage, usage, public prominence and how a donor鈥檚 name is actually used. For example, naming the lobby of a hospital usually costs more than naming an operating suite.

Naming opportunities are often described, with dollar amounts, in what is called 鈥渁 table of needs.鈥 The organization creates this menu to market its fundraising appeal. But donors should remember that dollar figures鈥攁nd the areas they correspond to鈥攁re usually negotiable.

The table of needs is often just a starting point. Donors can be proactive in negotiating for 鈥渙pportunities鈥 not mentioned. Any 鈥渁sk鈥 is only the beginning of a conversation that aims to produce a win-win result鈥攄esigned to serve both the organization and the donor.

Often payments for leadership gifts are spaced over a number of years. Appreciated securities can be used as well as cash. A financial advisor and legal counsel can be helpful in structuring the gift as there may be tax ramifications.

Many nonprofits will ask donors to make their regular annual donation as well making a naming gift because the operations budget is separate from the capital campaign. And naming opportunities are just that, opportunities, not obligations. Donors may choose to decline naming rights or choose to reserve naming rights until a future time.

Moving Forward

Moving Forward

Philanthropists give leadership gifts for a variety of reasons. Among them:

  • They seek impact and are willing to become prime movers for projects they believe in
  • They want to motivate other donors聽to give to a particular cause
  • They welcome recognition
  • They are building a philanthropic legacy 鈥 for themselves and their families聽

All these motivations have merit. But often the first inspiration to give comes from something very personal, something not listed above.

The spark of interest in a cause鈥攐r the strong identification with an organization鈥攊s often natural, spontaneous and intuitive. John C. Malone, former CEO of Tele-Communications, Inc. (TCI), is a philanthropist and the largest private land owner in the United States. He says donors 鈥渨ill do what鈥檚 in their enlightened self-interest and in their heart.鈥*

Mr. Malone pledged $50 million to endow 10 professorships at Yale鈥檚 school of engineering in 2011. (He鈥檚 a Yale engineering grad and believes passionately in education and technical training.)

Mr. Malone鈥檚 heart-oriented, enlightened self-interest is not uncommon among philanthropists. And as donors investigate the possibility of making a leadership gift, they may want to follow his lead and consider the motivations they hold dearest.

Often the gifts that are most fulfilling to donors are those that turn personal experience into public benefit.