Sponsored organizations, as well as sponsors, sometimes wonder if a contract is really necessary to define the relationship between the two parties. The answer is, “Absolutely!”
Even when the commitment from the sponsor does not seem large, it is still wise to have something in writing. A contract doesn’t have to be a complicated document prepared by a bevy of lawyers requiring sign-offs by a fistful of people on both sides, but there is still something comforting (and potentially redressable) about a few words on paper. Remember, too, that every relationship is unique; this makes pre-written, generic agreements of little value.
When considering whether a contract is necessary, think about what a contract ought to do: solidify a relationship; outline and detail responsibilities of both parties; clearly explain the solution to possible problems.
Spell out the rules
In sponsorship as in other business arrangements, at least some of what can go wrong will go wrong. So arm yourself with a contract that spells out as much as possible what the ground rules are when things don’t go precisely as planned.
Who are the partners?
In the written agreement, make sure you include the obvious (length of term and geographical territory). Make certain as well that you know who the legal and binding partners are. For example, dealerships in a national network are not the same as head office. Similarly, a single franchise is not in a position to make a binding commitment for the larger organization. From the other side, a grassroots cause may not be a legal entity.
The point is: make certain you have a clear understanding of your partner’s legal standing. If things go off the rails, you don’t want to find you have nowhere to go to seek legal redress.
Be clear on meanings
What, for example, does ‘logo on all communications’ cover? Do you mean this sponsor along with 37 others? Do you mean letterhead and fax cover sheets, but not much else? When you offer ‘sampling opportunities` is there a likelihood that, because the fundraising campaign will be conducted in several shopping malls, the sponsor will have to negotiate separately with each mall management? If so, say so. The long-term health of the partnership with your corporate sponsor depends on your candor and clarity.
Ensure also that all compliance agreements and penalties are set out: What happens if payments from your corporate sponsor are late? What happens if your sponsored event is flooded out?
Set out the rules for notification
Who talks to whom when problems arise? Never think that because you left a message on someone’s machine, you have fulfilled your obligation to provide timely information. This simple item can save lots of headaches. Finally, determine who announces the dollars involved in the deal and other relevant numbers.
No contract between the partners in a sponsorship arrangement – no matter how well drafted and carefully thought-out – can completely eliminate the possibility of misunderstandings, or even a stormy dissolution. After all, a sponsorship agreement is only as solid as the undocumented trust between the two parties. But that trust is always fortified when both partners give thoughtful attention to the legal/contractual underpinnings that help ensure neither party gets a rude surprise.
Judith Barker is publisher of The Sponsorship Report and consults with not-for-profit organizations interested in exploring their sponsorship options. Find out more at www.sponsorship.ca or contact Judith at (416) 466-4714.
