Price of Named “Gifts” Going Up?

The quotation marks in the headline suggest my skepticism regarding “philanthropy” in the form of “gifts” that essentially buy one’s name on a building – or, as this story by Michael Gross illustrates, one’s name on four restrooms at the Museum of Contemporary Art in Manhattan. Gross’s story recounts the fact that Jerome L. Stern donated (or should that be “paid”) in excess of $100,000 for the benefit of having his and his wife’s names “writ large” on the Museum’s restrooms. Gross also notes that the “price” of such naming opportunities has risen steadily over the past decades; the minimum donation to become a benefactor of the Metropolitan Museum of Art has gone from $100,000 in 1967 to a minimum of $2,500,000 today. He also notes that the naming rights for business schools generally go for less than medical schools (hmmm . . . I guess that says something about the relative perception of business and medical schools in the public prestige department).

Way back in 2001, I wrote an article on whether “donations” for such naming rights should be tax deductible (I decided not; article available from Lexis here), and Gross’s article highlights how these transactions have become big business for certain charities. Ian Ayres and Jeremy Bulow suggested in a 1998 article in the Stanford Law Review (The Donation Booth: Mandating Donor Anonymity to Disrupt the Market for Political Influence, 50 Stanford Law Review 837) that we should require political contributions to be anonymous in order to sever the link between contributions and political influence; I probably wouldn’t go that far with respect to the Section 170 deduction for contributions, but I do wonder if we should prohibit a deduction for any donation that is accompanied by a “naming opportunity” (well, perhaps with the exception that we would permit a deduction if the donor uses the naming opportunity to honor someone other than herself, her business or her relatives . . . ). After all, is a payment really a “contribution or gift” if a large part of it buys immortality and prestige?

JDC