Seton Hall University posted the following statement on its website:
Seton Hall University has removed the name of L. Dennis Kozlowski from the academic building that has borne his name since 1997. The Stillman School of Business and the College of Education and Human Services are currently housed in the facility, which will now be called Jubilee Hall in recognition of the University's sesquicentennial anniversary this year. In addition, his name was removed from the rotunda in the University's library.
Mr. Kozlowski asked that this action be taken during a telephone conversation with University President Monsignor Robert Sheeran in late July. Respectful of the donor's wishes, Monsignor Sheeran then notified the University's Board of Regents that Mr. Kozlowski's name would be removed.
According to Monsignor Sheeran, Mr. Kozlowski's request was motivated by his ongoing affection for the University, as well as his desire to spare Seton Hall any further adverse attention or distraction from its educational mission. Mr. Kozlowski was convicted on June 17 of grand larceny in New York State Supreme Court.
We don’t know the terms of the agreement, if any, between...
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Mr. Kozlowski and Seton Hall regarding Mr. Kozlowski’s reported $3.0 million contributions to Seton Hall. Was there an agreement that provided for the naming? If so, did the agreement contain a “bad-boy clause,” specifying the circumstances that would permit Seton Hall to rename the building?
Well we can’t answer those questions, but we believe these events do hold an important lesson for other charities that do grant naming rights in exchange for major contributions. Specifically, the charity should include a “bad-boy” clause in every agreement or “letter of understanding” specifying the conditions under which the donor’s name can be removed from the building, scholarship fund, or other asset. Pledge agreements, which we believe should be structured as binding agreements (unless there are very good tax or business reasons for a letter of intent), should provide that payments under the pledge will continue even if a “bad-boy” clause becomes operative before the pledge is paid in full. Many charities will argue against this out of fear of offending donors. Granted, a customized provision will be problematic. However, no one who truly has the charity’s interest at heart should object, particularly if they conduct their lives in an above-board manner.
Fortunately for Seaton Hall, Mr. Kozlowski recognized the potential problem his name posed for the University and much to his credit, he voluntarily asked Seton Hall to remove it. Other donors in Mr. Kozlowski’s position might not have been so magnanimous. Without a “bad-boy” provision, another charity in Seton Hall’s position might have been stuck with the name of another donor who got into trouble.
As is often the case, we couldn’t help but laugh at certain comments, this time coming from a Seton Hall official. According to an article appearing in the Chronicle of Higher Education (Erin Strout, Seton Hall U. Removes Convicted Tyco Chief’s Name from a Building and a Rotunda—August 19, 2005), Seton Hall will eventually offer the naming opportunity for the building in question to another donor. It may be that crime does pay: Seton Hall now has the opportunity to sell the naming rights for the building a second time.
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