When Charitable Gift Agreements Go Bad: Why a Morals Clause Should be Contained in Every Charitable Gift Agreement

After becoming CEO of Tyco International, Dennis Kozlowski made the company very successful. However, he was later convicted of serious crimes and sent to prison. Before his conviction, he donated a lot of money to Seton Hall University, Berwick Academy, and Cambridge University. When he was convicted, the schools didn’t want his name on their buildings anymore. Seton Hall University had to make a new rule about naming buildings because of this. Some people give a lot of money to colleges and universities in exchange for having buildings or programs named after them. But sometimes, the college finds out something bad about the donor and decides not to name the building after them. In one case, the donor sued the college, but the court said he waited too long to sue, so he lost. In one case, a court ruled that Vanderbilt University had to keep the name Confederate Memorial Hall for a dormitory, and pay money to the United Daughters of the Confederacy. In another case, a hospital didn’t have to follow the donor’s preferences because there was no written agreement. A charitable gift agreement is a contract between a charity and a donor. It explains what the donor is giving, when they are giving it, and what the charity will do with the donation. It also includes how the donor will be recognized and how the charity will report on the donation. It’s important for the charity to include a morals clause in the agreement, which says that if the donor does something bad or scandalous, the charity can take away their recognition rights. This helps protect the charity from negative publicity. Courts have enforced morals clauses in contracts for actors and TV reporters who got into trouble with the law. For example, an actor was fired for selling drugs, a director was fired for refusing to answer questions from a committee, and a news reporter was fired after multiple domestic disputes. Even though it may seem rude, charities should include morals clauses in their agreements to protect themselves. It’s not about not trusting donors, it’s just a way for charities to protect themselves. This article is about naming opportunities for charitable trusts and the implications for taxpayers. It discusses a case where a school had to deal with the name of a fallen CEO on its wall.

Source: https://www.floridabar.org/the-florida-bar-journal/when-charitable-gift-agreements-go-bad-why-a-morals-clause-should-be-contained-in-every-charitable-gift-agreement/