Its harder than you think for charities to return tainted money 


Charities can have the most trouble distancing themselves from tainted donors when they grant a major giver naming rights: that is, name programs or buildings after them.

Vanderbilt University learned this lesson the hard way when it attempted in 2002 to rename “Confederate Memorial Hall,” a building which it had acquired following a merger with George Peabody College for Teachers in 1979.

Peabody had received a donation of $50,000 from the United Daughters of the Confederacy in 1933 to fund the building’s construction, with the condition that the building carry the moniker in perpetuity.

After Vanderbilt publicly announced that it would remove that tribute to the Confederacy from the building’s name and walls, the organization sued to enforce the terms of its gift agreement.

In 2005, the court ordered the university to reimburse the United Daughters of the Confederacy the value of its original donation, adjusted for inflation, in exchange for the right to rebrand the building.

A decade later, anonymous donors gave Vanderbilt the $1.2 million it took to get rid of what Chancellor Nicholas S. Zeppos called “a symbol of exclusion, and a divisive contradiction of our hopes and dreams of being a truly great and inclusive university.”

Yet some charities opt to maintain the donor’s name despite sullied reputation. Almost 10 years after the Enron scandal broke, the University of Missouri at Columbia appointed its first Kenneth Lay Chair in Economics.

The professorship was established with a gift of $1.2 million in Enron stock from Kenneth Lay, its chairman and CEO, in 1999.

Despite the company’s collapse in 2002, the University of Missouri declined to terminate or rebrand the professorship. Likewise, Northwestern University still maintains a building named after Arthur Andersen, a one-time faculty member and the founder of a huge accounting firm destroyed by the Enron scandal.

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