Detailed Discussion

Corporate businesses can sponsor arts organisations in many ways, including:

• Project sponsorships: come from the budget of the marketing or public relationships arm of a business for a one-off activity

• Corporate social responsibility partnerships: made with charitable causes which will make a social impact

• Shared-value partnerships: where two organisations benefit from promoting a cause

• Workplace giving: staff donate a regular amount of money to an organisation of their choice; some companies match staff donations 

• Corporate philanthropy: funds are granted from foundations with designated interest areas and criteria for support

• Fundraising events: designed to raise funds for charity through staff involvement 

• In-kind support: provision of services or products 

• Volunteering: or pro-bono services 

Key Issues

The major risk for art organisations entering into a relationship with either a private or public sector supporter is damage to its reputation through association with a brand that does not align with stakeholder values. This could lead to artists boycotting cultural events, negative media or a community backlash for both the arts organisation and their business partner. 

The sponsorship policy supports the objectives, purpose and values of the organisation. All partnerships should be formed to further an organisation’s strategic direction and be developed around a clear set of principles. The sponsorship policy should be made public in the interests of accountability.

The establishment of a sponsorship policy provides a clear framework for an organisation to assess potential partners. The application of this policy will ensure that conflict with stakeholders can be avoided as the organisation can articulate the rationale for the partnership. 

The policy should outline the organisation’s position on issues including: 

• Public association with organisations: It is unwise to partner with any organisation that you are not prepared to acknowledge and support in the public arena. These organisations could include religious associations, partisan and/or registered political organisations, or organisations affiliated with discrimination or defamation.

• Ethics and art support: It is unethical to receive support from any company that is illegal or is directly or indirectly involved in activities which are not aligned with the values of your organisation. Examples of illegal sectors include tobacco products, firearms and weapons and pornography. Alcohol and gaming are not illegal but may be deemed as damaging to some stakeholder groups. Concerns around environmental issues and human rights are increasingly affecting partnership decisions. 

The following processes should be undertaken with each new sponsorship and each renewal of a sponsorship, as public opinion and sponsor activities frequently change.

Research

Arts organisations must have clarity around their own values before considering a business partnership. Research is also needed on the values, impact and investments of any prospective partner before entering initial discussions. A partnership will only succeed if the values of both organisations align.

Arts need to consider the ethical and legal dimensions of a sponsor’s business or public affairs as well as the weight of public opinion. 

In some cases, public sentiment around the legal and ethical status of the business is unclear. In this case, due diligence through research and applying a risk assessment is required. 

Risk Assessment

An organisation can be confident they have made an informed decision about whether to partner or not by applying their sponsorship policy and conducting a risk management assessment. 

Some of the considerations in a risk management assessment will be:

• Which stakeholders will be impacted by this partnership?

• Will the impact be positive or negative?

• Is this an equal partnership that provides benefits to both parties?

• Can we deliver the benefits? And at what cost – financial, reputation, time?

• What are the positive outcomes for the community?

• Do values align? Are there ethical considerations?

• Even though we can do it, should we do it?

Board Review

After completing the risk assessment the senior team will make a recommendation to the Board on whether a partnership should be accepted or declined. The recommendation will be reviewed by the Board in line with the sponsorship policy and a decision made. 

The sponsorship agreement will usually have two parts. The first, a standard legal agreement, includes cancellation terms in the case of reputational damage and force majeure clauses. The second is a schedule that describes mutually agreed benefits, responsibilities and timelines. It is important there are no grey areas. This reduces any disputes during the delivery of the sponsorship. The agreement must be signed by both parties. 

An agreement should include:

• the term (length) of the agreement and renewal options (e.g. first right of renewal)

• clear outline of obligations of both parties, including expectations around communications and notice periods when making requests of the other party

• exclusivity clauses

• payment schedule 

• ownership in any copyright material produced during the sponsorship relationship

• agreement in relation to use of any existing copyright material or trade marks

• termination clauses

• acknowledgement arrangements, such as naming rights, positioning and size of logo, invitations, comp tickets and verbal acknowledgements  

Any sponsorship agreement is entered into with goodwill. Circumstances may change and partners are usually pleased to vary agreements following transparent discussions. 

Agreements should not seek to remove artists’ rights to freely voice their opinion on the sponsor and the sponsorship arrangements.

Also included in agreements should be a clear termination clause that allows organisations to terminate if they see risk of reputational damage caused by continued relationship with the sponsor. If grievances or conflicts arise, it is recommended that both parties meet with an independent mediator. If that does not resolve the issue, the termination process is detailed in the agreement with reasons for termination and reference to length of notice, etc.

For more information, see Grievance and Dispute Resolution.

A sponsorship policy provides organisations with a decision-making framework. If the organisation has confidence in that process, it will refer back to it when being faced with criticism by stakeholders.