Sponsor's Drama
Curtain up on a sponsorship drama

How far is a manager bound by the sponsorship undertakings of a predecessor? That's ROBERT SOUSTER'S ethical challenge.

Gina is the Business Development Manager for a branch of JKL Bank plc and she manages the local budget for public relations and community projects. A month ago, head office cut the budgets for these activities by 60%.

So, Gina has written to several local organisations that have previously received sponsorship from the bank regretting that it would no longer be able to offer support for the coming year.

One recipient was Charles, the director of ‘Stages’, a local amateur dramatic society. Each year, it produces a high profile open-air Shakespeare play. The society has no premises, so it performs in a museum courtyard, located in a park owned by the local authority. The bank has sponsored this annual event for the last five years.

Charles expresses great disappointment and encloses a copy of an email from Gina’s predecessor which congratulates him on “the great success of your 2009 production, which was received so positively by those who came to enjoy it”. It adds: “Your team is so dedicated and deserves such recognition. At JKL Bank, we’re proud to be associated with your society and I have no hesitation in assuring you that we will continue to support your productions in the future.”

Charles’ letter also explains that the local authority is substantially raising its charge for using the museum grounds and so the bank’s decision not to sponsor the 2010 performance will almost certainly mean the production will not go ahead – the first time the society has had to cancel a production since it was formed in 1955.

He concludes by saying that he understands the commercial pressures on the bank but, if asked by the local media why the performance is being cancelled, he’d have no choice but to be “totally frank” with them.

Concerned by this reaction, Gina decides to reassess the budget. She’s very worried about the bad publicity that would emanate from the bank’s withdrawal of support, with inevitable comments on local radio and in the town’s newspaper. However, by reinstating the sponsorship she’d have to take funds away from other community projects, including some involving a hospital, a school and two charities.

What should Gina decide…?

The ethical stance
Unlike the evaluation of large-scale sponsorships, the payback on local sponsorship is often difficult to quantify. Most marketing professionals agree that it reinforces the brand and increases awareness of the organisation’s products and services.

But, in common with other ethical matters, the issues here go beyond the short-term financial considerations that should be evaluated. For every local initiative supported, others will be foregone.

Johnson and Scholes describe this as the extent to which an organisation is prepared to go beyond any stakeholder group’s minimum expectations. Some organisations participate in certain activities because they’ll enhance shareholder value; others see indirect, longer-term benefits for stakeholders (who may include future customers).

Most banks accept that they must play an active role in the local community and anticipate that this must also bring some benefits to the organisation. Few will support local projects for totally philanthropic reasons. They will instinctively ask ‘What’s in it for us?’

Protecting reputation
One vital element of community involvement is enhancing the reputation of the organisation. Many financial institutions support the arts, for instance, to create associations with some higher cultural values.

No bank has a duty to give to any section of society, but failure to do so – or choosing to withdraw having done it in the past – may have negative consequences. If Charles cancels and states it’s because of the bank’s withdrawal of support, it will undoubtedly result in some negative press for the bank.

Yet Gina must be careful not to respond to Charles’ emotional response as if it were a threat: by reinstating the sponsorship, she’ll simply have the same dilemma next year. But reaffirming the withdrawal, she has also to be certain that it won’t destroy the trust of key local stakeholders.

A promise given...
The case turns on the rather unwise email sent by Gina’s predecessor. Its wording most certainly does not give a contractual commitment and could not even be regarded as a representation in the eyes of the law. Nonetheless, Gina’s predecessor has sent quite a strong signal to ‘Stages’ that it can rely on the bank for at least the near future.

Although Gina did not make this promise, she’d be unwise to ignore it. In the words of Frederick Herzberg: ‘You can never remove a remembered pain’. Faced with the difficult decision, Gina would do well to reconsider the budget, even if it means that others will be disappointed in the short-term. But any reinstatement of support should be accompanied by a clear statement that the bank’s commitment cannot be open-ended, and that it would consider working with the drama society to encourage other sponsors to come on board in the future.

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