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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 in the community. 

Effective sponsorship arrangements can bring many benefits, but they also create corruption risks and can generate perceptions of unfair advantage for certain sponsors. Public officials need to understand these risks, and the management of sponsorship arrangements needs to be transparent. 

Can sponsorship be a criterion for a tender? 

An agency was considering whether to include in tender documents an opportunity for tenderers to provide sponsorship to the agency, separate from any contracted goods and services – specifically, whether to ask tenderers to indicate the level of sponsorship they were willing to provide in the future. It was not clear if the intention was to make the willingness of tenderers to be a sponsor a criterion for tender evaluation.

The ICAC advised that, if the agency pursued this arrangement, the point about sponsorship being a tender criterion or not must be clarified so staff evaluating tenders would know what should be considered, and so tenderers would understand the criteria on which the agency was basing its decisions.

A preferred approach is to keep sponsorship and procurement activities entirely separate so that they could be assessed on their own merits.

Source: Request for advice made to the ICAC.

Expanding 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 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 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.

Source: Request for advice made to the ICAC.

Common corruption risks in sponsorship include:

  • a sponsor/potential sponsor offering gifts and other inducements to public officials in order to influence their decision about the sponsorship
  • a sponsor who is also subject to regulation by a public sector agency using the sponsorship arrangement to cultivate relationships with public officials in order to influence their regulatory decisions
  • a supplier offering sponsorship (for example, of health and well-being programs) that could be perceived as a means of predisposing public officials to favourably considering that supplier for future work
  • suppliers being aproached to sponsor charitable or other activities (such as a staff picnic or golf day) by an agency's staff in a non-official capacity (for example, as members of a staff club, association or union) that might cause the supplier to feel pressured to provide sponsorship for fear of losing future work
  • similarly, suppliers being advised by a public authority that it supports a particular cause and suggesting they consider making a donation (perhaps indicating a target). Again, suppliers may feel pressured to make a donation; and there is an associated risk of extortion.

Developing a strategy

Sponsorship arrangements are an acceptable activity for public agencies, but agencies should assess the risk of corruption and apply appropriate management strategies. If the risk of corruption is too great, sponsorship should be declined.

Whether you need a strategy for sponsorship will depend on whether this is a likely eventuality for your agency. The reason to have a strategy in place, which includes a written policy, is to ensure that when offers are made the agency can respond quickly and fairly by assessing proposals against predetermined criteria. 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 relevant bodies have an equal chance of accessing a sponsorship arrangement, and that the public sector agency obtains the greatest available benefit.

A written policy can help achieve consistency and compliance around sponsorship, but only if staff understand the policy, are able to comply and are motivated to comply. Training staff involved in sponsorship to ensure they understand policies and procedures and know how to implement them is essential. Including sponsorship arrangements in internal audit and corruption risk management programs can help detect improper behaviour, opportunities for corruption and work as a deterrent.

Each sponsorship arrangement should be underpinned by a written agreement. Records should be maintained about each sponsorship arrangement regarding agency expectations, objectives, ethical requirements, sponsorship opportunities, sponsor benefits, sponsorship guidelines and the criteria against which a proposal would be assessed.

Following a risk assessment of sponsorship arrangements, consider these strategies:

  • evaluate and understand the value of the sponsorship arrangement to potential sponsors
  • seek and grant sponsorships by using broad-based, open processes that are not limited solely to invited sponsors
  • assess sponsorship proposals against predetermined criteria that have been published in advance or are circulated to organisations that submit an expression of interest
  • arrange for the CEO or another senior officer to approve sponsorship arrangements
  • ensure 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
  • check that the objectives and/or mission statement of the sponsor are aligned with those of the agency
  • ensure any products provided by the sponsor are consistent with the agency's objectives and values
  • prohibit public officials from receiving a personal benefit directly from sponsors, and tell sponsors they are not allowed to offer such benefits.

Certain activities should be excluded from sponsorship arrangements, such as joint ventures, consultancies, grants, unconditional gifts, donations, bequests and endowments. Potential sponsors may try to bundle these activities into sponsorship arrangements, but from a corruption prevention perspective, these activities pose different risks and should be managed separately.

Where an agency is offered sponsorship from an entity related to an employee (or a councillor in the case of a local government), this situation should be managed as a conflict of interest. There may be merit in the proposed sponsorship, but the employee or councillor with the private interest in the potential sponsor should not be involved in any decisions about the activity. 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.

Some agencies give an agent or a broker authority to organise their sponsorship arrangements. This approach can reduce the agency’s control over financial and legal commitments to the sponsor if not properly managed. However, it can also reduce the risk of public officials being improperly influenced by sponsors. If an external agent is used, ensure that they are provided with sound and sufficient guidance. A procedure or a checklist might be useful and the relationship with the external agent should be reviewed regularly. The engagement of the agent should be done with the same rigour as any other outsourcing decision.

Updated December 2018