Last week I received an inquiry from a reader who raised an interesting question: What is the best way for an organization to recognize a generous donor? One common practice is naming a building in honor or in memory of a donor, but it comes with its challenges.

The first challenge is to determine the scale that indicates the minimum that must be donated before a project can be named for someone. This is a very difficult challenging task that is compounded by the fact that the size of a donation given for the right to name a building often determines what can be requested from other donors to name rooms, large halls and other spaces in the building. At the same time, if the organization requests too high an amount for the building then they may never be able to secure the donation and that could hold up their successfully raising the funds needed to construct the building.

Often this depends on the financial ability and willingness of the donors approached to contribute the necessary funds. During the campaign to raise the funds for capital projects, the fundraising professionals and volunteers must give serious thought to identifying potential donors and assessing their ability to provide the necessary funds. There is a delicate balance between asking someone for a contribution they cannot possibly make and soliciting a donor for an amount way below their available resources.

For example, someone who has never made a gift of $1 million should not be approached for a gift of several million dollars for a building unless the appropriate research indicates that the person has the ability to provide the necessary funds, but had never been inspired enough by a project to do so. This potential donor could be solicited if the proper background research had been done and if there were people close enough who could broach the issue with the person. When a specific project resonates with a person’s interest then it is possible that the response will be positive.

In the same way, if an active contributor in the community is asked to donate funds to name a classroom in a school building in memory of a deceased relative and the person has the financial capability of providing the funds for the entire building, the school does not want to miss out on this wonderful opportunity. The implications of underselling naming opportunities go beyond just the individual donor contributing less than they are capable of giving. When other contributors see that the donors has giving far less than she could provide to the school then they will think to themselves, “If she gave $ 25,000 when she has the ability to give more than me then I am certainly not going to give anywhere near that amount.”

I know we do not like to think in terms of competitive philanthropic giving but it is a reality when funds are being raised for capital projects. Those of us involved in securing gifts for naming opportunities would prefer the dynamic to work in somewhat of a different way. We would rather people feel encouraged to increase their gift because they see what other people in the community are contributing. We would rather a person say, “If Shimon is giving $50,000 to the new school building then I should do the same.” But this is not often the case.

After a decision is made about the amount of the donation requested for the entire building then other amounts can be assigned for the rooms in the building, as well as for the equipment and furnishing necessary to open the building. In general, rooms of different sizes are assigned a monetary value to secure the right to name the space after a person or family. For larger spaces in the building, it is possible to group several donors together and to recognize all of them for the contribution.

Once the contribution is secured the focus then becomes the appropriate way to acknowledge the donation. Some organizations place a sign in each area recognizing the person who provided the funds and the name of the person who is honored or memorialized by the contribution. Those organizations that prefer not to have signage throughout the building often have an area in or near the entrance to the building that lists all of the spaces that have been dedicated in honor or in memory of people and the names of the contributors.

When someone makes a gift to a capital campaign it should not be the last gift they make to the nonprofit organization. Instead, we should strive to use contributions as a way to build and strengthen the connection the person has to the organization. If they are already involved in the organization then this is a way to reinforce their investment, and if it is a first time gift then the donor should be encouraged to become involved in the agency and to see their donation as the beginning of their tenure as a supporter.

Naming opportunities present a number of different challenges to nonprofit organizations. In upcoming postings I will look deeper into this topic and discuss ways to acknowledge donors when there is not a capital project, as well as what to do when contributors do not want to see their name on a building, but they must still be honored and acknowledged. To be continued …

Stephen G. Donshik, D.S.W., is a lecturer at Hebrew University’s International Nonprofit Management and Leadership Program and has a consulting firm focused on strengthening non-profit organizations and their leadership for tomorrow. Stephen is a regular contributor to eJewish Philanthropy.