Newsletter
August 2020
This month, the firm presents to you an abstract of Mr. Philippe LEGREZ’s speech, Michelin Foundation’s General Delegate during the Webinar “corporate sponsoring, a way to enrich its CSR” organized last July 16th and 21st.
Here are the links to watch the webinar in two parts (in french):
– Part 1
– Part 2
Intervention of M. Philippe LEGREZ :
Corporate sponsoring, a way to enrich your CSR.
I/ Corporate sponsoring and CSR policy, similarities and differences
A) What is the corporate sponsoring?
One could define corporate sponsoring as the global aids donations given by a company to a group of general interests. For the tax authority, a group of general interests must fulfil some conditions: its activity must be non-lucrative, its governance is disinterested and its aim does not belong to the benefit of a small group of people.
Donations which come from corporate sponsoring actions can take several forms: donations in hard currency, in-kind donations or the possibility to ensure the availability of qualified staff to groups of general interests/services.
B) CSR Policy, simply explained
CSR is the acronym of « Corporate Social Responsibility » in terms of social relations, the sustainability issues and social implications. The underlying idea of the CSR is that the company’s aim shouldn’t be restricted to the creation of a value, but opened to its external and internal environment. This could be achieved by leading a good health and security policy for the staff, by favoring the inclusion and diversity and assuring the respect of human rights by its partners by reducing its ecological impact.
C) Similarities and differences between corporate sponsoring and CSR
It is commonly said that the CSR’s goal is the “common good” and that corporate sponsoring serves “the general interest”. These two different approaches share a common goal which is to express the societal commitment of a company. With the CSR like with the Corporate Sponsoring, the company pretends to answer to the society’s expectations, beyond simple legal obligations. One could also add that the CSR and the corporate sponsoring are both promoting values of the Company. These values are what costumers are choosing one brand or company instead of another.
The main element of contrast occurs in the fact that the CSR permits to the Company to do a better marketing and sells its products or services in a lucrative perspective. The corporate sponsoring is completely optional for a Company and generally has no direct impact on its sells. The corporate sponsoring dos not anchor itself in a lucrative perspective. The Company does not directly beneficiate from its corporate sponsoring while the CSR could be a sale argument and directly affects on its economic performance. Furthermore, the corporate sponsoring beneficiates from a better tax policy because its donations are deductible of 40% of the tax amount on Companies unlike CSR.
II. The organizational and practical linkage of the Corporate sponsoring and the CSR
On an organizational perspective, it does not seem to be a predominant and unique model of organization regarding CSR. Some companies have a specific department for CSR while others do not. Concerning corporate sponsoring, it can be exercised by the company itself in “direct control” or through a structure dedicated to corporate sponsoring. These structures can be a corporate foundation or an endowment fund. For the example of corporate sponsoring exercised in “direct control”, the team in charge of the corporate sponsoring can differ from one company to another, depending on its size, its model of organization. The manager of the corporate sponsoring can even be the CEO of the company, the team in charge of the CSR, the communication department, the public affairs department or others. It goes without saying that if the company decides to exercise a corporate sponsoring close to the CSR, its organization should be placed within the CSR department or subordinated to it.
From a practical point of view, it is possible to distinguish two possible situations: the first one is where the company wants to do a corporate sponsoring linked to its activities and aligned with its CSR policy. It is a “strategic corporate sponsoring”. The second situation is where the CEO or the team in charge of the corporate sponsoring sponsor actions depending on their preferences or their personal history, without any practical link with the company’s activity.
III. Reasons why doing Corporate sponsoring
A) A non-lucrative logic to complete the CSR
Corporate sponsoring can be used to increase the societal commitment of a company. The current societal injunctions towards companies are not only “defensively” of which they have to warn or diminish the potential negative consequences of their activities on, for example, their staff, subcontractors, the environment, etc… But “offensively” of which they have to guarantee a sustainable development for humanity. The CSR policies and a “dynamic” corporate sponsoring’s essence is to promote the economic attractiveness of a company. A certain amount of economic studies certifies that a social commitment and the creation of values are often bound to each other.
B) An altruist non-lucrative logic or an engine for innovation
Non-the less, corporate sponsoring is not limited to the societal commitment of one company. It can be perceived though other eyes. Corporate sponsoring can be an incubator or the matrix of innovation in different domains. As the corporate sponsoring does not target the return on investment and does not anchors itself in a non-lucrative logic, it can test new concepts of which the lucrative world or merchants would have not tested because of its lack of predictable profits.
Corporate sponsoring can allow a company to go out from its inner world and “build bridges” with people and work environments of which it has no connexion with in its natural domain of activity.
The company can also deliver free service delivery for groups of general interests or freely instore the availability of qualified staff for groups of general interests in order to beneficiate from the staff qualifications. It is called the “corporate sponsoring of skills”. Through this way, the company can make the community beneficiate freely of its staff’s skills, staff who can enrich its professional pathway.
IV. The terms and conditions of corporate sponsoring
A) The “direct controlled” corporate sponsoring
The “direct controlled” corporate sponsoring can be done without a dedicated structure. This solution offers the advantage of simplicity and agility. Non-the less, if the company wants to build a structure in order to organize its corporate sponsoring, it is preferable to create a corporate foundation or an endowment fund.
B) The corporate sponsoring through a corporate foundation
Several elements explain why companies create corporate foundations:
- The necessity to organise the corporate sponsoring when it becomes bigger
- The necessity to manage professionally the corporate sponsoring with a full-time dedicated staff on donations management
- The corporate foundation can be used as the Lead of corporate sponsoring and give the company a better visibility
- To give credit to the corporate sponsoring activity of the company
Corporate foundation can be created by civil companies or commercial companies, Public organization with a commercial purpose, cooperatives, health mutual, or provident institutes. Its creation requires an authorization from the Prefects and the redaction of its administrative status by précising the name of the founding companie(s), its purpose, its duration, the financial commitment of its founder(s) which has to be at minim of 150.000€ and the conditions of nomination of its administrative council.
The financing of the foundation is a flux financing. It receives each year donations from its founders and uses it to finance its actions. The foundation can also receive funds from the State and local public entities
C) The corporate sponsoring through Endowment fund
The creation of an endowment fund answers to the same aim of those previously listed for the corporation foundation. Endowment funds are characterized by a greater flexibility than the corporate foundation: it is not subordinated to an administrative authorization but to a simple declaration to the prefecture of its social siege and can be for both limited time and unlimited time of existence. The founders can freely organize the structure’s governance. Besides, the initial endowment of a fund has to be at minimum 15.000€ compared to the endowment for a corporate foundation which has to be at minimum 150.000€.
V. The main steps of the donations management’s procedure
A) Donation requests
The corporate foundation or fund can “pro-actively” lunch public projects or contact general interest groups, or “passively” receive donation requests.
B) The beneficiary’s selection
The requests’ selection can be done either by the governance of the foundation, or by its administrative council and/or by its selection committee – if it exists – by the team of the foundation or its Leader.
The criteria of the selection are legal and fiscal: projects or actions which are supported must be anchored within the foundation’s purpose and must be of general interest. Projects or actions can be selected depending of the activity of the company, their visibility, their experiences and personal preferences of the people who select them etc…
C) The sponsorship agreement and its main clauses
The clause of the purpose
The clause of the funding
The clause of the anticipated termination
The clause of the duration
The clause of the beneficiary’s commitment
The clause of the counterparts
D) The communication
They are two types of companies which are totally opposed from each other: the non-communicative companies which are not willing to communicate on the supports they bring to their causes and others who wish to communicate on their corporate sponsoring.
The classical communication tools are: the foundation website, its annual activity report, its newsletters… The communication can be done by the beneficiary as a counterpart of the help they received.
E) The beneficiary’s project’s tracking
One of the foundation’s role is to inform ad control the good management of the project or the action which it has decided to sponsor. This tacking can be done by the team of the foundation, or by “godfathers” or “godmothers” who are in charge of being in contact with the represents of the beneficiary.
In case of non-conformity to the development of the projects regarding the sponsorship agreement, the agreement can, depending on the circumstances, change the evolution of the project of interrupt its financial support if the donation’s full amount has not been given yet.
F) The final assessment
The final assessment of the donation is crucial. It can permit the foundation or the fund to evaluate if its support has been useful r not. In some cases, this assessment is quite difficult, rather sometimes impossible to achieve.
When it is possible, the assessment either qualitative and quantitative seems legitimate and even essential: it retrospectively teaches if the foundation made its choice wisely, it can permit to continue or to stop the renewal of a sponsorship agreement. In case of success, it can encourage other corporate sponsors to bring their support.
