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Opinion and Insight

Navigating the Minefield of Corporate Sponsorship is Getting Harder, 2 years, 7 months ago

The power of association can be a dangeous risk for brands nowadays says Compassionomics founder Paul Smith

Navigating the Minefield of Corporate Sponsorship is Getting Harder

There is nothing like a juicy scandal to grab our attention. We humans love them and not because we are voyeurs; we love the gossip. It’s hardwired into us. In the animal kingdom (specifically great apes) it’s called “social grooming”. Gossip is our social grooming.

Scandals involving celebrities are our favourites. Why? Possibly because celebrities need the limelight for their art and that social phenomenon “tall poppy syndrome” (in which people of merit are resented, cut down or criticised because their talents or achievements distinguish them from us) means that when someone seeks the limelight and then wants to suddenly avoid it, we leap onto them like our gossip prey. Anything that makes us feel better about ourselves, albeit temporarily.

Political scandals get a good run in the media too. Perhaps not as juicy as the celebrities but because they are supposedly trusted representatives of the people, often what would be nothing in the world of celebrity is everything in politics, however both of these worlds are merging more and more today.

However corporate scandals are equally prevalent but you won’t read about them in the gossip magazines. In fact, many never become public as lawyers do their job and tie everything up in settlement and backroom deals. It would seem that incidents of corruption, negligence or corporate bullying are just not as sexy as who is sleeping with whom! For some time now, it would appear almost expected that businesses behave badly so corporate scandals are like water off a ducks back.

So, what happens when one sticks and is played out in the media?

Last year one such scandal involved a long-standing and respected arts festival, the Biennale of Sydney, and its main sponsor Transfield Holdings. Not usually a household name, one of its holding companies (Transfield Services) became one when it won the contract to provide services to Manus Island and Nauru asylum seeker detention centres for the Australia Government. That put the name Transfield firmly in the spotlight.

What has this got to do with the Biennale event? A number of artists threatened to boycott the event unless Transfield was dropped as a sponsor. Other sponsors were also dragged into the debate. Likewise, other events including the Festival of Dangerous Ideas (held at the Sydney Opera House) was also later involved due to common players who were similarly implicated with the mandatory detention of asylum seekers.

No one, it seems, was immune and least of all Franco Belgiorno-Nettis, the wealthy industrialist, celebrated philanthropist and founder of both Transfield Holdings and the Biennale.

In the end, the directors of the Biennale severed the partnership with Transfield Holdings, Belgiorno-Nettis resigned as chairman of the festival, and the artists and their supporters won the day.

What can brand and corporate affairs managers learn from this?

We now live in the digital and information age. There are few places to hide and corporations, events or teams and charities are going to have to be especially careful about who they get into bed with.

This isn’t anything new, but now sponsors will have to pay even close attention to all of the players and not just the event, organisation or sports team they are sponsoring. It’s no longer enough to just make sure values are aligned with one party; now you’ll need to take a closer look at the values and business activity of the other sponsors involved. But it doesn’t stop there. What about the ambassadors, players, artists and board members? No stone can be left unturned. It’s a minefield and it’s going to make it harder for some companies to find partners and for those partners to find sponsors.

What’s more, it doesn’t stop with just corporate sponsorship. Any business transaction should really go through the same level of scrutiny and the concern is that we are just not equipped for that level of inquiry. It could mean that corporates become far more risk averse when it comes to finding partners.

It is also unfortunate that nowadays any business can be caught up in a scandalous affair with little or no power to do anything about it. Some might say that winning a servicing contract to run a detention centre is just business.

Paul Smith is founder of Compassionomics, a place for the heart and head to collaborate for greater success. He is chair of the Jane Goodall Institute Australia and a mentor for the School for Social Entrepreneurs. Paul is also the co-founder of XY on Boards, the purpose of which will be to increase the number of purposeful and talented young professionals on company boards. He also likes gin!