Charities, associations limited by guarantee and unincorporated associations, can all benefit from entering into partnership with commercial partners.
Commercial partnership is when a charity or an association enters into a partnership agreement with a commercial company intending to raise money for the charity/association or to raise its awareness.
It will usually allow the company the use of names or logos so that the company can associate itself with the charity/association and in return the charity/association will receive a proportion of the income or some other benefit which is related to the promotion.
For sports organisations, commercial partnerships will be based on sponsorship agreements whereby commercial companies pay for the right to be associated with valuable assets owned by the charity/association such as national teams or events.
For charities and limited companies/unincorporated associations, working with commercial partners can be controversial. Consequently, organisations should consider establishing an ethics policy to be incorporated into the organisation's wider fundraising strategy.
The ethics policy should set out the types of companies the organisation does not wish to work with and should be linked to the organisation's values (see strategic plan).
An inappropriate choice of partner may create bad publicity and damage the organisation's brand and its future ability to generate commercial income.
Entering into a commercial partnership, charities/associations must ensure there is a suitable contractual environment to protect its commercial interests.
A written signed contract is essential and should include information on:
- date of contract
- names of parties involved
- details on what will be received and what should be provided
- details on payment: how much and when
- important deadlines: e.g. when certain services should be provided
- expiration dates
- renewal terms, if applicable
- damages for breach of contract
- termination conditions.
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