Getting sponsorship. (Checklist 085).

This checklist is a guide for commercial managers involved in corporate sponsorship for the first time. It looks at how to set up and get the best out of a sponsorship arrangement, for all concerned. The checklist is written for managers seeking sponsorship, but if you are a sponsor, read it with that perspective in mind.

Management Standards

This checklist has relevance to the MSC National Occupational Standards for Management: Key Roles A and B--Manage Activities and Manage Resources.

Definition

Whether it is charitable support or a business arrangement, sponsorship is a mutual partnership. It is an investment (not a donation) from which both sides gain. It involves:

* a sponsor, who funds an item or activity in return for promotional recognition

* a beneficiary, who produces the item or undertakes the activity.

The important phrase is `promotional recognition'. The Inland Revenue will define financial support as sponsorship (not a gift or donation) if references to the supporting company are more than a mere acknowledgement; i.e. they may include:

* the sponsor's logo

* the sponsor's corporate colours

* any mention of the sponsor's products or services.

Advantages of sponsorship

These include:

* sourcing new funds to enable projects to go ahead

* creating a public partnership which otherwise might not have occurred and from which both parties can benefit

* creating new promotional opportunities

* helping those involved to reach new audiences

* potentially creating a new identity or image for the parties involved.

Disadvantages of sponsorship

Sponsorship:

* is more complex than it may seem--be prepared to spend management time and resources for it to succeed. It is never simply a matter of putting one company's logo on another company's/charity's product

* creates a delicate and sometimes tricky relationship between two parties with different aims and agendas

* carries promotional risks--the sponsored organisation reflects on the sponsor

* is not a reliable source of funds for items requiring recurrent expenditure.

Action checklist

1. Check whether sponsorship is the right route to take

Whatever the item or activity considered for sponsorship, decide whether it is a sensible vehicle for promotional activities. Realistically, how much interest will it create? What audience will it attract? Then decide whether this will justify the expense involved in creating the item or event to be sponsored. Never go ahead with a project simply because it looks like you can afford it; there are always hidden costs, and merely covering them will end up costing the beneficiary (and often the sponsor) more money.

2. Identify objectives and strategies

Think through what the sponsorship needs to achieve. Does it aim to:

* reach new audiences?

* promote new products or ideas?

* display a new facet to the corporate image?

Whatever the reasons, they must be concrete enough to turn into clear objectives and you should be able to demonstrate how they will be achieved.

3. Do the sums

Once a sponsorship project has been identified, the project must be costed honestly. This is a business deal--you can't get away with scribbling a budget on the back of a paper napkin! Break the costs down into manageable chunks: production, equipment/materials, PR and so on. Be brutally honest, and don't ignore hidden costs such as administration and staff.

Take into account that for tax purposes you must handle sponsorship as a legitimate business expense. If not, you may find the Inland Revenue decides to disallow the whole amount when assessing your company's liability for Corporation Tax. Sometimes a donation can be made to a charity in tandem with the sponsorship payment--check with your financial adviser or the Inland Revenue, as regulations vary according to the type of company involved. (Scottish Law may differ).

4. Check the cost:benefit balance

A basic rule of sponsorship is that benefits the sponsor gets should be reasonable in relation to the cost of the product or event. You may have to demonstrate this to the Inland Revenue--so lavish entertainments or promotions shouldn't be offered for a 1000 [pounds sterling] sponsorship!

A major benefit for any sponsor is the reflected glory of being associated with your organisation. The "cost" of this association varies greatly depending on the strength and market value of the company or brand. Decide what your company/brand logo is worth to the outside world and don't be tempted to let sponsors use it for anything less than this price.

5. Choose your partner

Draw up a short list of potential partners--organisations or charities with which you are happy to link up (as sponsor or beneficiary)--and review them carefully. Are you and your company happy to be linked with them? How will all their activities (not merely the sponsorship) reflect on your own company? If the relationship seems to have potential, test the water. Find out whether they would be interested in such a partnership. It is worth being flexible as new sponsorship opportunities can emerge once both parties know what they are looking for from this sort of relationship.

6. Decide on what you want

Set out and agree the benefits for the sponsor right at the start. These can vary greatly, from simply badging the sponsored item or event with the company logo to promotional activities, reciprocal endorsements or entertainment opportunities. Keep the benefits reasonable in relation to the cost of the sponsorship, clearly lay out the costs and incorporate this information in the sponsorship agreement.

7. Confirm the sponsorship

Once all the details have been decided, draw up a letter of agreement or similar document. This is a requirement for charities under the Charities Act 1992, and is also common sense. Set out all the terms of the sponsorship in detail and make sure you include:

* basic activities and milestones

* dates including when the sponsorship starts and ends

* payment details and schedule

* named representatives of both parties, reporting and managing it day to day.

Charitable sponsorships require a public statement of how the charity will benefit from the sponsorship. If benefits include related sales or endorsements you must state what proportion of the sales revenue will go to the charity. This needs careful wording, so get advice from the charity itself or the Institute of Charity Fund Raising Managers.

8. Run the sponsorship

There are no big secrets to running a successful sponsorship--it is simply good communication, excellent organisation and a bit of creative flair. Plan regular reporting sessions with your sponsorship partner to discuss action plans and progress. Make sure both sides are clear as to how much involvement they want in running the sponsorship, and:

* decide when to launch the sponsorship; remember to check out the opposition (i.e. anything else which is being launched or run that might affect the success of your sponsorship) before fixing a date

* keep each other up-to-date on relevant developments

* stick to the agreement deadlines and milestones, and review progress regularly

* discuss and agree any changes to the set agreement before taking action.

9. Promote the sponsorship

Decide with the sponsor how and where you want to promote the sponsorship at the start. Consider the media, mail shots, placements in shops or public venues etc. Set out how both parties will be represented--how to use logos or corporate colours, who the front people are, and so on. If you're enlisting the help of board members or celebrities, get them on board early--they're busy people! Then set out a promotional schedule, including the lead times for media coverage, printing or advert placement. Remember that any printed material relating to charitable sponsorship should state how the charity will benefit from the sponsorship.

10. Make the most of the relationship

Think creatively. Look for additional ways of building the sponsorship relationship, such as promotional and sales opportunities, and links to other companies. Review progress as it develops, and at the end, decide if you want to take the relationship forward into the future. Is this just a one-off, or do you want to make it a regular activity? Are there other projects on which you could link up? If you want to continue the relationship, plant the seeds before the sponsorship ends; the success of the existing sponsorship will be the deciding factor.

Dos and don'ts for getting sponsorship

Do

* Treat it as a business deal, and manage it in the same way.

* Aim for a mutually beneficial partnership.

* Plan promotional activities well in advance.

* Check the opposition--anything likely to take the edge off your sponsorship.

* Talk to each other regularly and honestly.

Don't

* Act emotionally and convince yourself that the benefits outweigh the costs of the sponsorship package, if they don't.

* Plan the sponsorship without consulting your partner at every stage.

* Make assumptions, about tax, costs or budgets; check with the experts.

Useful reading

Books A guide to company giving 1995/96, David Casson ed London: Directory of Social Change, 1995 The effective use of sponsorship, David Wragg London: Kogan Page, 1994

Journal articles The world of sponsorship, Tim McGuire Chartered Secretary, Mar 1999, pp22-23 The enlightened self interest of giving, Crispin Wood Management Today Australia, Aug 1998, pp14-18 Improving company profile, David Martin Company Secretarys Review, 24 Dec vol 21 no 17 1997, pp129-130 Ambush marketing a threat to corporate sponsorship, Tony Meewaghan Sloan Management Review, Fall vol 38 no 1 1996, pp103-113

Useful addresses The Charity Commission, St Albans House, 57-60 Haymarket, London SWlY 4QX Tel: 0171 210 4556 The Directory of Social Change, 24 Stephenson Way, London NW1 2DP Tel: 0171 209 5151 Arts and Business, Nutmeg House, 60 Gainsford Street, Butlers Wharf, London SE1 2NY Tel: 0171 378 8143 Institute of Charity Fund Raising Managers 5th Floor, Market Towers, 1 Nine Elms Lane, London SW8 3NQ Tel: 0171 627 3436 Institute of Sports Sponsorship, Warwick House, 25-27 Buckingham Palace Road, London W1W 0PP Tel: 0171 233 7747

Thought starters

* What could sponsorship do for you?

* Why haven't you considered it before?

* What could your partners achieve from a sponsorship link with you?

* Whom would you need to convince and what would convince them?

Further information

Checklists are available in the following formats:

* Individual checklists.

* A complete set of 175 on CD-ROM or in hard copy.

* Checklists with permission to photocopy.

Full details of the range of checklists which are available can be obtained from:

Lavis Marketing, 73 Lime Walk, Headington, Oxford, OX3 7AD Tel: 0845 702 3736 (local rate call) Fax: +44 1865 750079 or from Checkpoint on the Chartered Management Institute's website at www.managers.org.uk