What is a Sponsorship Agreement?
Sponsorship agreements are contracts between a sponsor and a beneficiary that lay out the terms for an exchange of funds or services for a desired future performance. A sponsorship agreement outlines the relationship between the sponsor, generally a company, and the beneficiary, generally a non-profit, charity or organization who may puts on events or hosts programs.
Some cases make have sponsors pay for the right to advertise during an event or program, thus the parties would outline the rights to advertising and the nature of the advertising in a licensing agreement.
They can be structured as a formal contract as described above or as an informal agreement or even handshake deal. This type of agreement is sometimes called a "co-branding agreement." Even if a sponsorship agreement is called something else or it said verbally, the parties’ intent is generally sufficient to create an enforceable contract.
Understanding The Sponsor Side
Primarily, sponsorship agreements are business contracts between a business (sponsor) and an organization or association (beneficiary). Their purpose is to get sponsorship support for certain activities .
For example, an arts organization may want support to put on an art fair. They would outline their goals, such as how much money they want to raise or how many people they want to attend the fair.
Generally, what goes into a sponsorship agreement is:
- Purpose of the agreement
- How long it will go on for (terms)
- Benefits that the sponsor will receive for their sponsorship- How it’s promoted to the general public
- Benefits for the beneficiary if the sponsorship agreement is fulfilled, such as funds
Benefits for the sponsor:
- Easy way to boost public relations
- Create a tax write-off and fund charitable efforts
- Generate word-of-mouth marketing
- Create a unique experience for customers
- Increase online, social media and live traffic
- Create a new market and niche audience
Benefits for the beneficiary:
- Funds
- Supplies or services
- Promotions
- Free advertising
- Strategic partnerships
- Long-term business relationship
A sponsorship agreement can be anywhere from two to hundreds of pages. The terms can be discussed at length but the idea remains the same: the sponsor wants something and the beneficiary offers the goods.
Elements of a Sponsorship Agreement
The key elements of a sponsorship agreement will vary depending on the nature of the sponsorship deal, however, they will typically include all or most of the following details:
Parties to the agreement: The parties to a sponsorship agreement are usually a sponsor and a sponsor recipient. The terms sponsor and sponsor recipient are not legally defined, however, the term sponsor usually refers to an entity engaging in sponsorship, like a business or company. The term sponsor recipient usually refers to the entity sponsoring, such as a sport, event or venue. However, the term may also refer to a person.
Sponsorship details: This element of a sponsorship agreement generally provides details surrounding the sponsorship deal. The information included may relate to the nature of the sponsorship i.e. the type, duration and scope of the sponsorship.
Terms: This element generally includes the coming into effect and expiration of the sponsorship agreement.
Obligations: This element generally describes the parties’ obligations to each other prior to and during the sponsorship.
Advantages of a Sponsorship Agreement in PDF Format
A substantial advantage of using a PDF file format for acquiring electronic signatures for a sponsorship contract is that it greatly simplifies the distribution of the document as well as the ease of access. This is much improved from having to email a copy of the contract or mail a hard copy, both of which would need to contain either a lot of paper or lots of digital attachments. If a large number of people were involved in the contract, this task would become much more tedious, especially if the parties involved were from multiple states, provinces and countries.
The amount of time and added cost in sending a contract around for signatures becomes significant when many are involved or the magnitude of the contract is large. Sending out hard copies of a sponsorship contract also runs the risk of losing one somewhere, even though the standard practice is to require a hard copy to be physically delivered once signed, which adds the cost of a courier or overnight express service to the expense of the deal. Any errors found would require sending out a new contract and some parties get very stressed when large amounts of their time and other peoples’ time are wasted due to errors or misunderstandings, and this can sometimes lead to less than pleasant situations or even a failed deal.
Using a PDF template for the contract allows the contract to be very easily maintained in its original state as well, making it much easier to verify the legitimacy of the contract. Invalid contracts reduce the legitimacy of any signatures so if you have a legitimate contract, you want to make sure that the likelihood of the contract being invalid is as low as possible.
How to Create a Sponsorship Agreement
There is no one-size-fits-all sponsorship agreement to cover all types and levels of sponsorship. There are sponsorship agreements for small, local event sponsorships to high dollar trade show sponsorships to large multi-entity sponsorship agreements for any number of different types of activities. Accordingly, the type of sponsorship agreement used is determined by the specifics of the proposed sponsorship.
For instance, a sponsorship agreement for sponsorship of a symphony concert will be very different from one for sponsoring an annual golf tournament or fabricated metal tradeshow sponsorship. The former may cover the entire concert season, while the other two may be limited to a single event. The benefits provided to the sponsor, exclusivity of the categories, promotional opportunities, sponsorship fees, discounts, obligations of the parties, etc. will all vary depending on the type of sponsorship.
However, regardless of the type of sponsorship agreement, the sponsorship agreement should generally address the following:
Introductory Paragraph — Identifying the sponsor , the date, and the types of activities involved.
Article One — This should set out the types, duration, locations of the sponsorship levels, fees, sponsorships, and the payment terms. Be sure to include discounts for upfront payments and advance renewals.
Article Two — This should set out the rights and benefits of the sponsor.
Article Three — This sets out the promotional and category exclusivity rights of the sponsor to the exclusion of third parties.
Articles Four – Ten — These articles address to some degree obligations of the sponsor, including but not limited to providing a certificate of insurance, indemnification, term and termination, default, waiver, no assignment, no modification of the sponsorship agreement without both parties’ consent, notice requirements, governing law, severability, and entire agreement of the parties.
SIGNATURES – The changes, additions, or deletions to the above will depend on the parties involved and the scope of the sponsorship.
Common Sponsorship Agreement Pitfalls
One common mistake is the failure to properly specify the compensation to be paid under the sponsorship agreement, including whether payment will be in cash or in-kind, when payment must be made, and if there is to be any holdback for contingencies. It is also important to provide for reimbursement of third-party costs, where applicable, and expenses incurred by the sponsor in connection with the sponsorship (for example, the cost of travel and accommodation to attend an event). Expenses can be a large item, and should not be overlooked. Requiring the sponsor to prepay or cap some or all expenses may lessen the organizer’s exposure.
Depending on the nature of the sponsorship, it may also be a mistake to fail to negotiate specific performance obligations on the part of the sponsor, to require that the sponsorship must be "exclusive" to the sponsor (and what that means), and to fail to value the sponsorship property granted to the sponsor. These provisions will all be fact specific and will vary according to the type of sponsorship and the specific sponsoring entity.
It is a common mistake to fail to make adequate provision for cancellation by either the sponsor or the sponsor of the event, both of which can be caused by circumstances beyond the control of the parties. In such a case, is there to be a refund of the sponsorship fee, reimbursement of expenses, or is there to be any compensation at all? The answers to these questions need to be considered and addressed in the sponsorship agreement.
Depending on the nature of the sponsorship, it might also be a mistake to fail to make adequate provision for indemnification, exclusion of liability and limitations on liability to be provided to the sponsor.
Sponsorship Agreement PDF Templates
When searching for sponsorship agreement PDF templates, it is essential to look for credible sources that offer legally sound and customizable documents. While there are numerous websites that promise to provide the perfect sponsorship agreement template, it is crucial to ensure that the template is tailored to your specific needs and complies with relevant laws.
One of the best places to find sponsorship agreement PDF templates is on the websites of professional organizations and industry associations. Many of these organizations provide free or low-cost resources for their members, including customizable templates for various types of agreements. For example, if you are a member of an industry association related to your business, they may offer a library of templates that cover a wide range of sponsorship and partnership agreements.
In addition to industry associations, academic institutions and law schools are a great source of high-quality sponsorship agreement templates . Many law schools have offices dedicated to providing legal resources and support to local businesses or non-profit organizations. These offices often contain libraries of customizable templates and may even have an online portal where you can request specific documents related to your organization.
Another way to find high-quality sponsorship agreement PDF templates is to conduct a simple search on a legal document and resource website. These websites offer a comprehensive library of templates for various types of legal documents, including sponsorship agreements. It is important to note that while these templates can be a great starting point, it is essential to review them carefully with an attorney to ensure that they comply with applicable laws and regulations in your jurisdiction.
When selecting a sponsorship agreement PDF template, it is essential to consider the complexity of your project, the scope of the agreement, and the specific needs of your organization. Spending time to find a high-quality template can save you money in the long run by avoiding costly legal disputes down the road.