This page contains a free Ethical Sponsorship Policy Framework for charities and not-for-profit organisations. It was developed to provide charities and other values-led organisations with some basic tools to develop policy and practice on fundraising and commercial partner.
It comprises:
The operating environment for charities is extremely tough. Cuts in public sector funding, fewer grants from trusts and foundations and a fall in individual donations mean that charities are increasingly looking at areas of giving that they perhaps haven’t used before – or used to their full potential. Corporate partnerships, sponsorship deals and cause-related marketing are just some of the areas that many charities are looking to exploit, as the need to diversify income becomes ever greater.
However, the National Council for Voluntary Organisations points out that working with corporates, as with any business relationship, carries an element of risk. The Council suggests that developing gift acceptance policies can help prevent tricky situations from arising.
One of the biggest risks of working with a corporate – or even accepting substantial sums of money from one – is the risk to a charity’s reputation. In 2022, the Charity Commission opened a compliance case into one of the key donors of the Prince’s Trust. The Barrowman Foundation’s founder, the businessman Doug Barrowman, is head of a financial group that includes firms that promoted tax avoidance schemes to off-payroll workers. These are now being pursued by HM Revenue and Customs. It wasn’t just the Commission after the Trust, campaigners had previously criticised a decision to name one of the Prince’s Trust centres after Barrowman. And if that wasn’t enough, Barrowman happens to be married to ex-Tory peer, Michelle Mone, mostly known for her PPE scandal. While the Prince’s Trust may be well cushioned against the negative effects of scandal tainted sponsorships, the same may not be true for an “ordinary“ charity.
Sometimes the negative publicity of a partnership backfires so much that the partnership collapses. In May 2024, Hay Literary festival suspended its sponsorship from Baillie Gifford following controversy over the investment company’s links with Israel and fossil fuel firms. What followed this was nothing short of an avalanche: Baillie Gifford cancelled all of its remaining sponsorship deals with literary festivals around the country.
The decision for a charity or not-for-profit to enter into a partnership or relationship with a commercial company is not one to be taken lightly, say experts. Within charities, it is the Trustees’ responsibility to protect the charity’s reputation as well as its assets. This includes looking at the reputational risk of any business relationship – whether the company is seeking to donate money or enter into a more complex or long-term relationship. “Trustees should consider carefully donations from sources that might be seen to compromise the charity's reputation, independence and work.", states the Charity Commission in its Compliance toolkit created to protect charities from harm. Due diligence is key if the charity wants to establish if a “donor's activities or ethics may give rise to risks to the charity.
When thinking about the reputational risks, charities need to think carefully both in terms of public trust and confidence as well as in practical terms about whether the relationship will be beneficial for the charity or not, and whether that relationship is taking a charity closer to its organisational aims – or not.
According to a survey commissioned by Big Issue in 2024, eight in 10 shoppers are more likely to support brands that 'reflect their beliefs'.
“Some 70% of the poll’s 2,000 respondents said they were more likely to buy products from brands actively promoting their ethical and sustainable credentials, and 86% agreed that companies have a responsibility to set a good example in being environmentally aware.”
Ethical Consumer’s 2022 Market Report suggests that despite the economic downturn in the UK, the sales of ethical goods and services remained resilient and even increased by 33% in 2021.
Research for the 2010 Ethical Consumerism report found that 55% of people avoided a product or service because of a company’s behaviour.
Clearly, if some consumers are going out of their way to avoid commercial companies because of links to controversial issues, they could avoid donating to charities linked to those companies too. The public does care about the sorts of relationships that charities have, and is increasingly aware of the issues, both as consumers and in terms of the causes that they support.
It’s also important to take into account changing public perceptions of what is acceptable. “Sponsorship shifts have occurred on numerous occasions according to changing social norms and contexts”, says Platform in its Culture Beyond Oil report.
The past few years have seen a number of high profile fossil fuel funded partnerships break. The National Portrait Gallery, the Royal Opera House, the Royal Shakespeare Company, the Scottish Ballet and The Tate have all cut ties with BP during the past ten years. Platform says that “Many... cultural institutions were receiving tobacco money... yet now tobacco logos are absent from the cultural sphere.”
While some might argue that sponsorship “should be taken from any legally registered company”, this sidesteps any ethical considerations and ignores public perceptions say Platform. “Arms manufacturers and tobacco companies, once proud sponsors of many a sporting and cultural event, lost this marketing opportunity due to public outcry. Both remain legal businesses but are no longer considered acceptable sponsorship partners”. Platform believes that “as we transition towards a low carbon economy, it is inevitable that oil companies will find themselves increasingly marginalised in terms of partnership and sponsorship.”
In 2002, the Charities Commission published a detailed study on Charities and Commercial Partners.
It warns to take the “value of a charity's name” seriously. It says that an unsuccessful commercial partnership, “where stakeholders perceive the charity to have 'sold out', can damage the income and profile” of the charity.... Charities should consider establishing an ethical policy that clearly sets out the charity's values. This will form part of their wider fundraising strategy and they can use it to ensure that trustees, staff and any potential commercial partners share a common understanding of the charity's ethical values.
"As best practice, charities should highlight their ethical policies and any commercial partnerships they have in their Annual Report and yearly accounts.
"Against the framework of their ethical policy, charities need to carefully consider whether a proposed commercial partnership is appropriate and in the best interests of the charity."
The three examples of commercial partnership it gives are:
In its 2013 The Charities Commission compliance toolkit for protecting charities from harm dedicates a whole chapter for the importance of due diligence. It states that “Trustees should take reasonable and appropriate steps to know who the charity's donors are” and that due diligence will help to “assess any risks to the charity that may arise from accepting a donation or certain types of donations”.
The Charity Commission cautions that it’s the Trustees’ responsibility to look at the impact and risks of corporate partnerships, both in terms of protecting its reputation and its assets. As part of this, trustees need to consider the long-term implications of decisions – what the risks are of engaging or not engaging with a certain company.
Before looking at the detail of developing a policy, it is useful to understand two distinct approaches to commercial partnership.
Avoidance
Many ethical policies will be built around a list of the types of business that the charity will avoid. Tobacco and armaments manufacturers, and increasingly, fossil fuel companies commonly find themselves on avoidance lists at many charities. The mission of the charity itself will also dictate the type of business that the charity will want to avoid. See the section on Areas of Concern for more information.
Engagement
Sometimes when a potential problem with a company is less clearly outside the boundaries of acceptability, a charity can choose to 'engage' in discussions with a corporate partner to try to persuade it to change its behaviour. To some extent the idea of engagement has been borrowed from the world of ethical investment, where its use is more prevalent.
Amnesty International’s Global Fundraising Policy states that “Amnesty International will not accept funding from sources that are linked to the violation of human rights”. To ensure this, the organisation makes it mandatory for any solicited or unsolicited gift to go through a screening process before acceptance is permitted.
Charities need to consider having a policy about their own investments to maximise positive impact. According to the Charities Responsible Investment Network, “in the UK, charities have over £115 billion invested. This means they can be a huge catalyst for change. By investing responsibly charities can align their money with their missions and further their charitable objectives”.
An increase in queries about ethical investments has led the Charity Commission to update its investment advice to charities. In its updated report, it acknowledges that investments could “conflict with your charity’s purposes or harm its reputation” and it states that according to the law, it is up to the trustees to decide whether to make or not make the investment.
The report also states the Butter-Sloss case where two (unincorporated) charitable trusts sought the approval of the Court to the adoption of investment policies that ensure that their investments were aligned with the goals of the Paris Agreement on climate change. The judgement set out - amongst others - that “Where there are difficult decisions to be made involving potential conflicts or reputational damage, the trustees need to exercise good judgment by balancing all relevant factors, in particular, the extent of the potential conflict against the risk of financial detriment.” and that if “a reasonable and proportionate investment policy is thereby adopted, the trustees have complied with their legal duties”.
As institutional purchasers, charities could also consider adopting an ethical procurement policy. This policy takes into account ethical issues, as well as value for money. Oxfam’s Ethical Purchasing policy statement says that the organisation will purchase goods and services that
Charities’ policies in the public domain
Over the past decade, companies have been increasingly putting their corporate social responsibility policies and reports in the public domain. Charities, however, seem to be less forthcoming. You will find some links to some charity policies in the resources section.
| You may want to have one all-encompassing ethical policy for any type of corporate relationship – whether donor, supplier partner, or for investments – or you may want to have separate policies for each. Whatever you decide, it’s important be explicit and to define the scope of the policy. |
The Charity Commission recommends that a donations acceptance and refusal policy addresses: sponsorship, cause-related marketing and licensing. You could also include: gifts in kind, corporate volunteering, affinity marketing, pro-bono work by suppliers and staff donor programmes.
The template below comprises an amalgamation of some of the best bits of organisational policies that Ethical Consumer has found, particularly MIND’s policy, along with some recommended clauses from Ethical Consumer.
Text in [square brackets] contain words that we would expect charities to want to amend to reflect their particular circumstances. Please feel free to copy for use.
[Name] Ethical Sponsorship Policy
[Date]
1. INFORMATION
Name of Organisation:
Address of Organisation:
Website and email:
Contact for sponsorship issues:
Aims of Charity:
[Mission/values/vision statement: (if different)]
2. COMMITMENT TO ADDRESS ETHICAL ISSUES
We actively seek opportunities to work together with external organisations to achieve shared objectives. However, it is vital that we maintain our independence and do not allow external partnerships to bring the name of [NAME] into disrepute.
[NAME] therefore seeks, so far as is practical and within the constraints of UK law;
- initiatives that do not compromise the independent status of [NAME].
- to ensure that the activities of organisations we work with are consistent with our organisational values.
[NAME] is not used in a manner that would express or imply [name] endorsement of the company/organisation or its policies.
This policy has been devised to ensure clarity and openness to all our stakeholders. It is designed to address sponsorship [and cause-related marketing]. 'Sponsorship' means payment by a private sector organisation – or individual –, in return for public association with an activity, project, event or asset. This could be in cash or in-kind.
For our policy on donations, donor rights and gifts in-kind, see [insert where applicable or include above].
We welcome comments, criticism and suggestions as to how these goals can be met.
3. AVOIDANCE CRITERIA
Partnerships with companies involved in any of the following activities will be avoided:
- [tobacco manufacture
- nuclear weapons systems manufacture
- companies generating more than 10% of revenue from the sale of pornography
- fossil fuel companies
- companies financing new oil and gas production]
Areas of potential concern
[NAME] will not accept support that could compromise who we are and what we do - or undermine our effectiveness in achieving our goals.
Partnerships with companies whose commercial objectives would conflict with our goals and values, or which could promote inaccurate or misleading messages about our commitment to those goals and values would not be appropriate.
Other circumstances where there will be legitimate concern include - but not exclusively [insert as appropriate. Suggestions include: Companies with a poor reputation for equal opportunities and diversity. (It will be appropriate for your Trustees to have a discussion about which companies or industries would fit into this section). For specific examples see ‘resources’ section.]
4. CAUSE-RELATED MARKETING, AFFINITY MARKETING AND PRODUCT ENDORSEMENTS
[NAME] does not endorse or approve products or companies, and a statement to this effect will be included alongside any branding or promotion associated with products.
[NAME] will not promote any products unless published research has shown direct benefit to our beneficiaries
Only [NAME] and its subsidiaries will have direct access to our databases.
5. ENGAGEMENT
[NAME] believes that benefits to both partners can be enhanced if the charity partner has an input into policy issues at the commercial organisation. To this end, for substantial partnerships of more than 12 months duration, [NAME] will seek to establish a formal process for consultation.
6. PROCESS
[NAME] will not accept more than [five per cent] of total income per annum from one corporate partner, nor more than [20 per cent] of total income per annum from commercial organisations, so as not to compromise our integrity. This does not include money raised via employee and customer fundraising as part of any corporate partnership arrangements.
All cause-related marketing and sponsorship with a value of more than [£5,000] must be approved by the [Senior Management Team] and the [Board of Trustees].
[Potential funders will be screened through Corporate Research Database/Ethical Consumer Screening Services/Other to provide an independent assessment of funders before a decision is made.]
Contracts with partners must permit [NAME] to withdraw from any partnership where new developments mean that areas of this ethical sponsorship policy become breached.
7. TRANSPARENCY
A full list of corporate sponsors giving over [£5,000] will be maintained on our website.
[NAME] will communicate its commitment to this policy to the organisation's stakeholders. [A copy of this policy will be displayed on our website within 3 months of its adoption.]
If an ethical sponsorship policy is to exclude support from certain industries or business sectors, how do you decide which should be in and which should be out?
Most charities look to exclude partnerships with companies whose activities:
For a more detailed discussion, the Fundraising Regulator has a 'Code of Fundraising Practice', which specifically relates to Charities Working with Business. This is freely downloadable and contains a very useful Risk Assessment section. The Code went through a lengthy review, including information gathering and a public consultation, and a new code was published early 2025.
Whatever basic principles you choose, there are still a range of potential grey areas for any charity, and exploring the two inter-linked subjects of stakeholder surveying and company research can shed some light on the subject.
Sometimes it is difficult to know what things might be controversial or risky without some overview of the sort of PR problems that companies face. One solution may be to look through lists of the criteria that research organisations commonly track for their clients. Here at the Ethical Consumer Research Association, we have four core categories and many “bespoke” ones, depending on the industry. The core categories are: climate, workers, tax, and company ethos. Bespoke categories include, for example, animal welfare, palm oil sourcing, cotton sourcing, conflict minerals and tech sustainability. We currently have over 20 bespoke categories. Each category itself has a number of other sub-categories which are explained in more detail on our ethical ratings page.
Pre-2023/24 Ethical Consumer ranked companies based on 18 main 'categories' grouped into four main groups:
The best way to find out where the boundaries of appropriate fundraising should lie is to ask the organisation's 'stakeholders'. For most charities, key stakeholders would include staff, beneficiaries and supporters. They might also include: donors and funders, volunteers, interest groups, the public, central, regional and local government (as a funder or as a policy maker), partners or suppliers, the media.
A stakeholder survey could be:
Stakeholder surveys can also bring additional benefits to an organisation. They can help build a stronger relationship with stakeholder groups, by giving them a sense of ownership or involvement. They can also (if the results are right) bring legitimacy to bolder policies that may be opposed elsewhere in the organisation. The Co-operative Bank, in the development of its own ethical policies, commonly mails questionnaires to around one million people.
Once a list of problem industries or sectors has been drawn up, the next stage is to identify a consistent method to discover whether a potential partner is appropriate.
The Institute of Fundraising has a Code of Fundraising Practice for Charities Working with Business. The Code of Fundraising Practice for Charities Working with Business contains a section on research. Among its fourteen points are questions about:
It also suggests that the company itself might "exercise due diligence on behalf of the charity and be responsible for all of the costs". Given that companies are not always as critical of themselves as the civil society around them may be, this looks a slightly risky position on the surface.
Some charities, with limited resources, carry out this research themselves.
Corporate Watch has an excellent DIY Guide: How to Research Companies which contains a number of links to further research sites.
Others may seek to use more commercial external information providers to help them in this process. Ethical Consumer's magazine and Corporate Research Database are commonly used tools and have a range of prices, starting from just £360 and offers discounts for not-for-profits.
The Charity Commission recommends that charities develop an internal policy to cover research, planning and strategy processes, which includes establishing flexible written criteria for assessing the suitability of a proposed commercial partnership.
Some charities specifically refer to external sources as part of this external policy. International NGOs, such as Oxfam and Amnesty International use Ethical Consumer’s Corporate Research Database as part of their due diligence process.
Oxfam endorsed Ethical Consumer: “At Oxfam GB we rely on the Corporate Research Database as a key part of our private sector partner due diligence processes. It’s really easy to use and pull’s together relevant news stories and NGO rankings, summarising the key points and providing references to follow where more detail is needed.”
Mental Health Media states on its website that it assesses "potential corporate sponsors and funders using the Corporate Critic Database [Ethical Consumer's Corporate Research Database]. This offers us an independent and objective assessment of any potential funder or sponsor before a decision is made. In particular, it helps to identify companies which breach the criteria below..."