November 19, 1998 | Read Time: 2 minutes
Corporate sponsorships are a promising arena for raising charitable dollars, but now non-profit groups face an increasingly tough rival in pursuit of company cash: local governments that are cutting marketing deals with some of the nation’s biggest and wealthiest businesses.
Governing magazine (November) says “corporate sponsors have lined up to buy the naming rights to golf tournaments, college bowl games and sports facilities both private and public,” part of a trend toward “corporate branding” that raises troubling ethical questions.
The magazine does not mention the potential fallout for charities, some of which look to corporate sponsorships or outright company donations to sustain their budgets. But the race for corporate dollars among municipal governments clearly has implications for the non-profit world.
Governing points to the city of Sacramento, Cal., where in 1985 the ARCO chemical company paid $7.5-million to name a new basketball arena. While those dollars did not flow to the city — the arena is privately owned — the deal helped spur a wave of similar arrangements that do benefit local governments.
The magazine says Sacramento now plans to use sponsorship deals to alleviate a projected $14-million budget shortfall by 2000.
“The city has announced that it will sell sponsorship and naming rights to a range of city facilities,” Governing says. “Within three years, the city expects to reap an annual windfall of $2-million to $4-million.”
While municipal buildings are one front in the war for business dollars, Governing calls the world of elementary and secondary education “the new battleground” for corporate sponsorships. It points to a wide range of deals between soft-drink companies and school districts that will provide millions of dollars in revenue in exchange for promotional rights.
The deals are turning schools into a “flea market” where “anyone who can plunk down the price of a stall gets to be there,” Alex Molnar, director of the Center for the Analysis of Commercialism in Education at the University of Wisconsin at Milwaukee, tells the magazine. Mr. Molnar says the cola companies’ money is a “spit in the ocean” of school budgets and calls the school-system deals “the fiscal equivalent of eating a sugar doughnut. You get a short high, then you crash.”
