Kathleen Diemer
Founder and Owner of KM Diemer Consulting
ADRP Past President and Board Member

In the last few months, as more stories of unethical and illegal donor behavior have appeared in the news, reputational risk clauses have again emerged as a hot topic in the fundraising industry. While such clauses may be necessary to protect organizations and institutions in the event of a naming or donor association gone wrong, there are several questions organizations and institutions should ask before utilizing reputational risk clauses:

1. Where and how are you addressing reputational risk, and how are you discussing it with your donors? 

2. Do you have a documented procedure or protocol outlining how your organization would respond in a possible reputational risk circumstance?

3. Are you only addressing reputational risk that may come to your organization based on the behavior of a donor, or are you addressing it as a two-party shared act of trust?

Many donor relations professionals are also donors in their personal lives, and navigating the professional and personal intersection of philanthropy can be tricky. A few weeks ago, I found myself considering a reputational risk clause from both professional and personal viewpoints.

As a fundraising professional, I typically see reputational risk clauses written as one-way provisions that allow an organization to remove a name or disassociate from a donor if the donor’s actions cause reputational harm. But I have spent years wondering when a donor would ask what happens if the actions of an organization create reputational risk for the donor. Just as our organizations accept philanthropy from donors they believe they can trust, donors give to organizations and institutions they believe are trustworthy. 

Several years ago, I executed a gift agreement with my alma mater to create an endowed fund in my family’s name. Due to fortunate circumstances, I recently worked with them to amend my original gift agreement. While reading through the draft amendment, I noted that in the intervening years, they have included a reputational risk clause in their gift agreements.

I sat with the language for a while. The professional fundraiser in me understands and appreciates why it is there. But the donor in me kept questioning why the language wasn’t reciprocal. In that moment, I realized I could keep wondering when a donor would ask for reciprocal language, or I could be that donor. Using some of the institution’s own reputational risk language, I crafted reciprocal language. It stipulated that should the university division my gift supports, the institution, or its affiliated foundation act in a way that either I or my representative deem potentially harmful, a written request can be made to remove my family name from the created endowment fund and disassociate me with the funding. I am pleased to share that my alma mater accepted the reciprocal language.

Reciprocal reputational risk language is a reminder that philanthropy is a shared act of trust. Though our organizations and institutions need to protect themselves, we also owe our donors a mechanism for protecting their names when they have chosen to associate them with our organizations and institutions.