Sponsorship

Sponsorship is a commercial arrangement in which a "sponsor" provides a contribution in money or in-kind to support an activity in return for certain specified benefits. Many public sector agencies engage in strategic sponsorship arrangements for financial or other kinds of support, or to build relationships.   

Agencies need to be aware that while effective sponsorship arrangements can bring many benefits, they can also increase possible corruption risks. For this reason, agencies need to have appropriate policies and procedures in place, and ensure employees have a clear understanding of possible corruption risks and the need for open and transparent management of sponsorship arrangements.

The improper conduct of sponsorship can constitute corrupt conduct as defined by the Independent Commission Against Corruption Act 1988. 
 

Corruption risks

A risk assessment of the sponsorship arrangement is likely to identify some or all of the following corruption risks:

  • A sponsor/potential sponsor offers gifts or benefits to individual employees in order to influence their decision about the sponsorship.
  • A sponsor organisation (which is also subject to regulation by the public sector agency) uses the sponsorship arrangement to cultivate relationships with agency employees in order to influence their official decisions.
  • A potential sponsor offers generous sponsorship in return for favourable decisions in relation to regulation.

 

Managing corruption risks

As a minimum your agency should:

  • Introduce policy and procedures for sponsorship that contain elements listed in the Policy Development Guide and Checklist (see Tips and tools below).
  • Include in the policy sanctions for any breach of the policy and procedures.  
  • Review the policy every two years.
  • Refer to sponsorship in all corporate documents such as codes of conduct.
  • Train all relevant employees in the policy and procedures to ensure they are aware of their accountabilities.
  • Include sponsorship in the agency's internal audit and corruption risk management processes.
  • Include clear and standardised criteria for sponsorship that can be publicised to potential sponsors and used systematically to assess applications.

The following record-keeping requirements should be included in the policy:
 

  • Establishing and maintaining a register of sponsorships to help with reporting responsibilities and requirements.
  • Creating and maintaining information in relation to each sponsorship arrangement about agency expectations, objectives, ethical requirements, sponsorship opportunities, sponsor benefits, sponsorship guidelines and the criteria against which a proposal will be assessed.  
  • Ensuring each sponsorship arrangement has an agreement developed and maintained for that sponsorship file.

 

Risk management strategies

Following your risk assessment of the sponsorship arrangement you should consider these risk management strategies:
 

  • Ensuring sponsorship agreements do not impose or imply conditions that may limit, or appear to limit, the agency's ability to carry out its functions fully and impartially.
  • Checking there is no actual conflict between the objectives and/or mission of the agency and those of the sponsor.
  • Ensuring any products provided by the sponsor as part of the sponsorship arrangement are consistent with the agency's objectives.
  • Withholding permission for employees of the agency to receive a personal benefit directly from a sponsor.
  • Seeking and granting sponsorships by using broadly based, open processes that are not limited solely to invited sponsors.
  • Assessing sponsorship proposals against predetermined criteria which have been published in advance or are circulated to organisations that submit an expression of interest.
  • Approving all sponsorship arrangements by the chief executive or another designated senior officer of the agency.

 

Case studies

Case study 1: Sponsorship by tenderers
The ICAC was asked for advice by an agency that was reviewing the standard tender documentation in its procurement policy.  

The agency was considering whether to include in the documents an opportunity for tenderers to indicate the level of sponsorship the tenderer may be willing to provide to the agency in the future. It was not clear whether or not the agency intended that the willingness of potential tenderers to become a sponsor would be one of the criteria for evaluating the tender.  

The ICAC advised that this point must be clarified so that the agency employees evaluating the tender know what issues to consider and the tenderers understand the basis on which the agency is making its decisions. A better approach is to keep sponsorship and procurement activities separate so that they can be assessed on their own merits.
Case study 2: Opportunities for sponsorship
A local council asked the ICAC for advice about an arrangement it had with a local bookshop to host writers' events run by its public library. Although not called a sponsorship, the program involved public book readings by authors and the bookshop generally made money from the books sold at the event.  

The council officer asked if such a scheme should be opened up to a wider range of bookshops and perhaps publicly tendered. The ICAC advised that as the bookshop receives an ongoing benefit for its involvement in the program, other bookshops should also be given the opportunity to participate. In such a case a full public tender every year may not be necessary, but a publicly run process of some kind such as inviting expressions of interest or a tender every few years would help to assure ratepayers that the council is not providing an unfair advantage to one bookshop.


Frequently asked questions

Is seeking sponsorship an acceptable activity for a local council or public sector agency? 

Seeking and entering into sponsorship arrangements are acceptable activities for public agencies. However, public organisations are under an obligation to effectively manage the corruption risks associated with these activities. Agencies should assess the risk of corruption in any sponsorship arrangement and apply appropriate risk management strategies. If the risk of corruption is too great then sponsorship should be declined.

What does sponsorship not include?

Sponsorship arrangements may not include:

  • the selling of advertising space
  • joint ventures
  • consultancies
  • grants
  • unconditional gifts, donations, bequests or endowments.

However some potential sponsors may try to bundle these activities into sponsorship arrangements. These activities may carry different corruption risks and they should be treated separately rather than as part of a sponsorship arrangement.

How can my agency decide who would be a suitable sponsor?

Criteria for assessing which sponsors are suitable could include whether the potential sponsor is reputable, produces goods or services that are consistent with the values and objectives of your agency, and has an acceptable sponsorship record with your own or other agencies.

Should my agency accept sponsorship from a company related to one of our employees?     

This situation should be managed like any other conflict of interest. An employee should not be in a position to receive a benefit from a sponsorship to the agency. Nor should an employee who is related to a potential sponsor ever be in the position to decide who the agency should accept sponsorship from. If these considerations can be managed and the sponsorship goes ahead it may still be necessary for the agency to manage perceptions that an improper relationship exists.

My agency has never received an unsolicited offer of sponsorship. Do we need a sponsorship policy?  

You can probably assess whether sponsorship is feasible in your agency – both from the agency and the sponsor's point of view. The reason to have a policy is to ensure that when offers are made the agency can respond quickly and fairly by assessing proposals against pre-determined criteria developed in advance.

Ideally opportunities for sponsorship should be widely broadcast to allow expressions of interest from all interested parties. This helps ensure that the process is, and is seen to be, fair, that all companies have an equal chance of accessing a sponsorship arrangement and that the public sector agency obtains the greatest available benefit.

Should we use a sponsorship agent or broker?  

Using an agent or broker with the authority to make decisions can reduce the control the agency has over the financial and legal commitments. By the same token it may reduce the risk of agency employees becoming improperly influenced or too close to sponsors.
If you decide to use an external agent make sure that you provide the agent with sound and sufficient policy guidance. A procedure or a checklist might be useful and the relationship should be reviewed regularly.

The engagement of the agent should be done with the same rigour as any other outsourcing decision

Resources


Publications
 

  • Management of Corporate Sponsorship, Australian National Audit Office, Canberra, 1997
  • Sponsorship management – Achieving mutually beneficial outcomes, Building Capacity series Number 9, Crime and Misconduct Commission (Qld), Brisbane, September 2006.

 

Relevant websites

Related topics on the ICAC website

Tips and tools

Use this Policy Development Guide and Checklist when developing or evaluating organisational policies.