Sponsorships: private interests, public benefit.

• Date: 01 January 2009
• Author: Broder, Peter

The recent controversy over exclusion of the group Right to Play from the Vancouver Winter Olympics sheds light on a little discussed--or understood--corner of charity law. The controversy stemmed from efforts to ban Right to Play from the 2010 Games because it has a sponsorship deal with Mitsubishi Motor Sales, which ostensibly conflicted with the exclusive sponsorship rights for the event negotiated by General Motors with the Vancouver Organizing Committee.

Right to Play is a registered charity that uses sport and play to promote health, building of life skills and peaceful resolution of conflict among youth in developing countries. Attending the Games provides an opportunity for Right to Play to profile its humanitarian work and introduce itself to Olympic athletes--a number of whom have, in the past, become key supporters of the group.

The Right to Play sponsorship is reportedly worth $480,000, and the General Motors deal worth some $67 million, so there are significant commercial interests at stake. But what is interesting from a charity perspective here is the question of valuing sponsorship arrangements and the risks of not valuing them properly.

When a charity has an opportunity to align itself with a business, the revenue that the charity is able to generate through the arrangement is often viewed as "found money." Sometimes, for relatively little effort, the charity can receive a significant contribution either to a particular program or for its general operations. What's more, it is a contribution that is not a receipted donation for purposes of calculating the charity's disbursement quota, thus offering a group a lot of leeway in how it may be used.

In a...