DATELINE: May 12, 2009, Chicago
One thing is for sure, Brandies general counsel Judith R. Sizer is certainly earning her salary this year. Sumner Kalman, the great nephew of Julius Kalman, has filed suit in Suffolk County probate court in Boston claiming that Brandeis is not honoring the terms of a gift made by Julius Kalman circa 1956. John Hechinger, Brandeis Plan to Raze Building Sparks Donor Suit, Wall Street Journal (May 13, 2009). At the time, Brandeis built a science building and named it after Mr. Kalman, who bequeathed the funds for the building.
As happens with the passage of time, the building...
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became obsolete. Brandeis currently is building a new science center, which will be named after Carl Shapiro, a Brandeis donor. As a side note, Mr. Shapiro has been widely reported to be a victim of the Madoff Ponzi scheme. Brandeis plans to demolish the old science building. It also plans to continue its recognition of Mr. Kalman and has been working with the family to develop an appropriate way to do so, according to Hechinger's reporting.
There has been much debate whether Brandeis acted appropriately in announcing on January 26, 2009 that it would be closing the Rose Art Museum, a decision that currently is being revisited. Although we have not seen the Kalman gift instrument, we strongly suspect that the lawsuit brought by Mr. Kalman’s great nephew is not a viable one. In other words, we suspect that Brandeis is in the right.
The Kalman lawsuit represents another unfortunate dispute over donor recognition. These suits easily could be avoided if charities and donors would just recognize the inevitable: Buildings eventually are either repaired, torn down, or replaced. That may be 50 years off, but as the Kalman suit aptly demonstrates, time marches on all but for the deathless gods of Homeric Greece.
Gift agreements that call for donor recognition should anticipate the inevitable. Specifically, they should address:
How the donor will be recognized at the time of the gift.
Under what circumstances the donor will continue to receive top billing in the event of major renovations or additions to the building.
How the donor will be recognized if the building is torn down or replaced.
The distinction between naming a building and naming the department or center that will occupy the building.
What happens to the name if the institution merges with another institution, resulting in consolidation of buildings or departments.
There has been at least one case where a building was named after a donor, but a center occupying the building was named after someone else. As we recall the incident, the family of the donor who had the building named after him objected when the donor who had the center named after him began to receive what was perceived to be more prominent recognition.
In negotiating with donors today, charities should keep tomorrow in mind. It is easy to grant naming rights today, but sometime down the road, the institution will need to undertake major renovations. Those in the development department fifty years from now will need naming rights to entice another donor to finance the renovations. The current staff should recognize and plan for that eventuality. One approach might be to tie continued recognition of the current donor to his willingness to fund an endowment that will cover future renovations.
We will be particularly interested to see whether the Suffolk County probate court grants the great nephew standing to maintain the suit. Unless Massachusetts law has specific provisions that would grant standing, we suspect the great nephew's case is weak. He normally would have to rely on the well-established doctrine of special interest standing, which was recognized in the 1930s by the first Restatement of Trusts. Entitlement to special interest standing often hinges on an attorney general who is missing in action. In this case, the Massachusetts Attorney General has said that Brandeis adhered to the terms of the will. Moreover, the attorney general has noted that nothing in the terms of Mr. Kalman's will requires Brandeis to maintain the building beyond its useful life. Anyone who has read the case law on special interest standing knows that those sorts of statements from an AG are the kiss of death for someone seeking standing. Once an attorney general takes a position on a case, the courts are reluctant to permit others to intervene. It can happen, but there must be extenuating circumstances.
We do hope the court issues a formal opinion whatever its decision.
| THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NONPROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL.
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