The risks of sponsorship
Prominent phenomenon of the late 20th century in France, the development of corporate philanthropy has led companies to organize and rationalize their interventions in favor of public causes. Major companies have started to create foundations, to better define their scope of work and to organize their governance structure in order to avoid conflicts of interests, cronyism or squandering. Recent cases have brought out the other side of risks induced by corporate sponsorship: the ones that are run by beneficiaries. The late are now faced with problems of choice of their sponsors and the need to be careful with the content and development of the partnerships.
How to be helped without being compromised?
A very strong mobilization of patient associations, strongly relayed by the media, has led several American and British cultural institutions to give up the patronage of the Sackler Family, a generous sponsor for several generations but whose name is now irreversibly soiled by the crisis of opioids in the United States. In France, the ministry of culture has recently decided to reimburse the €200 million donated by an international group to restore a monument, after a subsidiary of the company has been sued.
The subject of sponsorship took on a national political dimension when Anne Hidalgo turned down the sponsorship of Total for the 2024 Olympic Games in Paris, on the grounds that the group’s activities in fossil fuels would be in contradiction with the ambition of an “exemplary environmental event”. This decision was soon pointed out by the President Macron who criticized the “state of mind on private funds” of the Major of Paris, saying he was not to “explain to all employees of Total in France that their work is unworthy”. Others wondered why the Major was putting the spot specifically on this group: is there any big company about which we could say without any doubt that it is “exemplary on an environmental ground”? Also, what can be said about the banks that finance the projects or about insurance companies that cover the activities of these big industrial groups? Weeks before, the “sponsorshipthon for big fortunes” triggered by the fire in Notre-Dame Cathedral was criticized on social network as a “legacy washing” operation, financed by two-third by the State and potentially compromising for its beneficiary, regardless of the crucial interest of restoring the monument.
“Should we put an end to Sponsorship?”
Beyond those examples, the hidden interests of sponsors (tax reduction equal to 60% of the donation amount, private use of public structures, image stakes) are increasingly emphasized. Furthermore, the Ministry of Economy and Finance suggested to reduce the attractiveness of tax reduction for sponsorship. The Government now seems to support a decrease of tax credit from 60% to 40% for donations greater than 2 million euros, willing to preserve “proximity in sponsorship” as opposed to large transactions financed by big groups. At the same time, the rules imposed by the Sapin 2 law on gifts strongly limit, because of the costs of tickets, the possibility to invite clients or partners to cultural shows or sport competitions, although those facilities are one of the main counterparts in this kind of sponsorship. What can be offered to companies in exchange?
More fundamentally, the issue lies in the difficult adequacy between the company’s activities and the project it supports, which is subject to increasing denunciations. The environment of distrust is such that Admical, the association created by Jacques Rigaud in the 80’s to develop corporate sponsorship, dedicates its annual seminar next autumn to the question “Should we put an end to sponsorship?”.
The answer to this question is crystal clear for the beneficiaries: they are note in favor of ending sponsorship. In 2012, the Minister of culture Aurélie Filippetti, member of the Socialist party, considered that “the State cannot deprive itself of the contribution of sponsorship”. Most of major cultural, social and sport institutions could say as much. Not to mention the multitude of smaller local events or structures that could not operate without the support of even limited sponsorship.
82 000 companies in France sponsored a project, for a total of 2 billion euros of donations. The current polemics could put such amount of donations at risk. Therefore, we shall try to respond to those criticisms and ease the controversy. For that, institutions calling for sponsors should lay down some specific rules.
How to avoid controversy and reputational risks?
If the contribution of corporate philanthropy is recognized by all the actors of the sector as a crucial and structuring element for most cultural, social or sport projects, its increasing dominant position in these projects raises questions and criticisms. The Senate understood the urge of the question as it has just announced the organization of a dedicated seminar next autumn.
The first rule to follow is to limit the share of philanthropy in the total financing of the project or the institution. Corporate sponsoring must remain a minority share, and if possible, when sums involved are high, to split them between several sponsors.
The second rule is for beneficiaries to ensure a genuine transparency in the choice of the sponsors and in the counterparties they get, as in the commitments they take. Some organizations have already voluntarily defined ethic charts for their sponsorship policy. They might also put in place an independent committee to give advices on potential sponsors and agreements.
The last rule is to implement a strong and pedagogical communication about the content of the partnership agreements and about what is expected from the two parties.
To go beyond, the Government would be well inspired to take advantage of the momentum created by the reform of sponsorship tax deductions to launch a broader reflection to assess corporate philanthropy from the viewpoint of beneficiaries, and to draw up best practices from which everyone could take inspiration in the future.