(1) What are sponsorship and community benefits

Sponsorship is where the organisation gives cash or another benefit to an individual or organisation to assist that individual or organisation perform or pay for an act (e.g. an individual running a race, or an organisation holding a sporting or cultural event or a conference, or a sports team rebuilding its pitch).

Community benefits are where the organisation provides a benefit to a community, such as building a school, or providing sports clothing to a team, or books to a school.

Sponsorship or community benefits could be considered to be a bribe if they are given or received with the intention of influencing someone to act improperly, or as a reward for having acted improperly.

(2) What types of sponsorship and community benefits are not likely to be regarded as corrupt?

The following are examples of where payment by the organisation of sponsorship or community benefits is not likely to be regarded as corrupt:

• An organisation agrees to sponsor its personnel to run in a race to raise funding for a major international charity (e.g. Red Cross, Oxfam etc).
• An organisation agrees to donate books to a school in a village where there is no ownership or management connection between the school and the organisation’s clients or any relevant public official, and where the school is for the benefit of the whole local community.

(3) What types of sponsorship and community benefits are more likely to be regarded as corrupt?

The following are examples of where payment by the organisation of sponsorship or community benefits is more likely to be regarded as corrupt:

• A public official responsible for awarding a contract to the organisation requests the organisation to provide sponsorship for an event being organised by a small local charity. The management and objectives of the charity, and potential use of funding are not clear to the organisation.
• A public official running for re-election, and who has, and will after re-election continue to have, decision making influence over awards of contracts to the organisation, requests that the organisation makes a major donation to the construction of a library with which the official is openly connected, and which he is referring to in his campaign. In this case, the donation may help the library get built, which may help the official get re-elected, who may then award a contract to the organisation.

(4) Controls and factors

The organisation should implement effective controls over sponsorship and community benefits, so as to minimise the risk that they could be corruptly given, or be perceived to be corruptly given.

The following are recommended controls, and some factors to be taken into account in implementing these controls.

(1) State the restriction in the policy

If the funding by the organisation of sponsorship and /or community benefits is wholly or partially prohibited or restricted by the organisation, or by law, then state the prohibition or restriction in the organisation’s policy.

(2) Consider the intention behind the sponsorship or community benefit

If the sponsorship or community benefit could be intended to influence someone to act improperly, it should not be offered or accepted.

(3) Consider the perception

Do not give sponsorship or a community benefit if it could reasonably be perceived to be corrupt. There are two common perception tests:

• “Newspaper test”. Would a newspaper be likely to report the sponsorship or community benefit, and, if a newspaper did report, what would the public perception be?
• “Prosecutor test”. If the sponsorship or community benefit did lead to a corrupt outcome, with the result that a prosecution takes place, how would you explain it in court to a prosecutor? Would your explanation be plausible to the judge or jury

(4) Consider the legal and regulatory environment

Before giving sponsorship or a community benefit, ensure that it is allowed by the law of the territory and the regulations of the recipient.

(5) Undertake due diligence

Undertake due diligence on the ultimate beneficiary of the sponsorship or community benefit before any commitment is made.  The purpose of this due diligence is to ascertain whether there is any connection between the beneficiary and any business transaction or public official with which the organisation is involved, or is likely to be involved.

• If personnel of the organisation are undertaking an act which the organisation is being asked to sponsor which will raise funding for a third party person or organisation (e.g. if personnel are running a race, with the proceeds going to charity), then the due diligence should be on the third party recipient (as per the guidance on Political and Charitable donations).
• If the sponsorship or benefit is for a community (e.g. shirts for a football team, books for a school, or a new library for a town), then the due diligence should be on any decision makers involved with the football team, school or town to see whether they are connected with any business transactions with which the organisation is involved, or is likely to be involved.
• If the due diligence above establishes a connection, then only give the sponsorship or community benefit if there is reasonable certainty that it could not influence, or be perceived to influence, a business outcome for the organisation.

(6) Prohibit the organisation’s personnel from requesting inappropriate sponsorship

Prohibit the organisation’s personnel from requesting inappropriate sponsorship from third parties, such as sponsorship from an organisation over which they have a decision making function.  If personnel of the organisation who are responsible for placing contracts with suppliers, or for approving suppliers’ work or payments, request those suppliers to sponsor the personnel or their friends or relatives (e.g. in a charity race), the suppliers may feel obliged to agree to sponsor the personnel as they may feel that failure to do so could adversely affect the personnel’s opinion of them and may prejudice their work prospects. Conversely, the personnel may favour those suppliers who make donations. For the same reasons, suppliers should not be asked to make donations for e.g. the organisation’s Christmas party or prize draw, even if the proceeds go to charity.

(7) Decide whether the sponsorship or community benefit should be publicly disclosed

In some cases, the law requires sponsorship or community benefits to be disclosed on a public register or in the organisation’s annual accounts. Even if not required, some organisations voluntarily disclose sponsorship or community benefits on the basis that transparency can help avoid the perception of corruption.

(8) Require approval in advance of the sponsorship or community benefit from the compliance manager

Require approval in advance of the sponsorship or community benefit from the compliance manager, (and, if appropriate from an additional senior manager). The reasons for the request and the approval should be documented, and the compliance manager must be satisfied that the sponsorship or community benefit is appropriate, and is not corrupt, and could not reasonably be perceived to be corrupt.

(9) Require sponsorship or community benefits given or received to be appropriately recorded

Sponsorship and community benefits  given and received should be recorded in a register or other appropriate record.