REG 03.00.05 – University Qualified Sponsorship Relationships
Authority: Vice Chancellor for Advancement; and Vice Chancellor for Finance & Administration
First Issued: February 22, 2022.
Contact: Vice Chancellor for University Advancement (919-515-3226) and Vice Chancellor for Finance and Administration (919-515-2155)
1. Purpose
NC State University strives to protect and maximize the brand, reputational and financial benefits received from sponsorship relationships for both individual operating units as well as the overall University. The advance identification, review, support, and coordination of external sponsorship relationships among internal units will enhance efficiencies and facilitate more advantageous strategic partnerships with external parties, leveraging the University’s brand while achieving unit and institutionally shared goals and optimal contractual terms and conditions.
2. Definitions and Background
2.1 A Sponsorship is the contractual commitment and provision of consideration (i.e. money, goods, or services) to the University in exchange for an institutional “Acknowledgment” of the subject sponsor or sponsorship. Sponsorships and Sponsorship Acknowledgments are not Advertising and may not include an Endorsement, as defined herein. For the sake of clarity, sponsored project agreements managed by Sponsored Programs and Regulatory Compliance Services, whereby an outside entity engages the University to perform research, are not Sponsorships and are not subject to this Regulation.
2.2 An Acknowledgment is a term defined by the Internal Revenue Code to signify the recognition of Sponsorship support by a third-party entity that does not implicate Unrelated Business Income Tax (UBIT) to a tax-exempt university. A typical Acknowledgment of a sponsorship relationship is the use of external sponsor’s trademark and/or trade dress along with information about the subject sponsor in promotional material for a University event or activity that is financially supported by the sponsor. An Acknowledgement can appear in a brochure, on a webpage, on temporary signage venues, or in the marketing or promotional information about a singular event or series of events, including institutional activities or programs (i.e. Athletics, pouring rights, financial services). An Acknowledgment on an institutional web site may contain a link to the sponsor’s web site. Acknowledgments are not advertising.
2.3 Advertising is a paid service purchased by an entity. Advertising is to be distinguished from an Acknowledgement and may compromise the achievement of a Qualified Sponsorship relationship exempt from UBIT.
2.4 A Return Benefit is any item or service provided to a sponsor in return for the sponsor’s support, or Sponsorship, of a University activity, event, or program. Examples may include, but are not limited to, event tickets, food and beverages, t-shirts, mugs or access to University services.
2.5 An Endorsement is any statement or depiction which can be reasonably construed to contain or imply a preference by the University, by any of its units or employees, speaking or acting in a representative capacity on behalf of the University.
2.6 A Qualified Sponsorship means a Sponsorship where the financial or other support satisfies IRS guidelines for “qualified sponsorship payments.” This means that the Return Benefit to the sponsor is a Qualified Acknowledgment of the Sponsorship that contains only such information as the sponsor’s location, telephone number, internet address, value neutral descriptions of sponsor’s products or services, and/or the sponsor’s logo, established slogan, brand or trade name. Significantly, IRS Qualified Sponsorship payments are exempt from unrelated business income tax (“UBIT”). Qualified Sponsorship payments are also eligible to be counted as charitable contributions.
2.7 A Qualified Acknowledgment is an Acknowledgement that does not contain qualitative or comparative statements (e.g., Sponsor makes the best shoes), price information or indicia of savings or value (e.g., Sponsor’s popcorn is the best price in town), call to action (e.g., Don’t miss Sponsor’s huge tent sale) or endorsements (e.g., the computer hardware preferred by NC State faculty and staff).
2.8 A Non-Qualified Sponsorship means a Sponsorship where the financial or other support fails to meet the IRS guidelines for “qualified sponsorship payments.” A Sponsorship may fall into this category because the Acknowledgment or the Return Benefit(s) go beyond what is permissible to be considered a Qualified Sponsorship (i.e. they constitute an Endorsement or Advertisement).
2.9 A Sponsorship Program is a program by which a University Entity offers Sponsorship opportunities to external entities (e.g., Sponsorship of a symposium, forum, or other event).
2.10 A University Entity is a college, department, center, institute, or other unit of North Carolina State University.
3. Executive Sponsorship Committee
3.1 The Chief Communications and Marketing Officer, in consultation with the Vice Chancellor for Advancement and Vice Chancellor for Finance and Administration, shall establish an Executive Sponsorship Committee, which will be led by the Assistant Vice Chancellor for Strategic Brand Management.
3.2 The objective of the Executive Sponsorship Committee is to ensure the University has identified, in advance, all affected units to the subject Sponsorship, the shared objectives motivating the subject relationship, the appropriate procurement process for the prospective Sponsorship, as well as those individuals appropriately suited to pursue negotiation of and execute the subject Sponsorship.
3.3 The Executive Sponsorship Committee shall adopt procedures for the review and approval of Sponsorship Programs and sponsors. These procedures shall provide that University Entities shall submit all proposed Sponsorship Programs or extensions or amendments of existing Sponsorship Programs, as well as all proposed sponsors, to the Office of Strategic Brand Management for prior approval. The procedures shall ensure that the University is leveraging the subject matter expertise and knowledge of the Office of Strategic Brand Management; to ensure that the University has a centralized database of all sponsors, which can be useful for academic/university partnerships, sponsored research, advancement, corporate and foundation relations, etc.; and to reduce the likelihood of entering a Sponsorship with sponsor that would conflict with an existing exclusive sponsor, or that may raise other legal, ethical, or reputational concerns for the University.
4. General Sponsorship Guidelines
4.1 Any corporation, organization, or individual that offers and provides support for University programs, events, or activities may be considered as an Acknowledged sponsor. Notwithstanding the foregoing, Sponsorships by alcohol, tobacco and/or gaming companies or distributors are not permitted absent special circumstances and approval by the Chief Communications and Marketing Officer.
4.2 The Acknowledgement of a sponsor by a University Entity may create a public perception of an association between the sponsor and the University Entity or activity being sponsored. When a University Entity considers entering into a Sponsorship relationship, it should evaluate the compatibility between the University’s mission and image and those of the sponsor. The University reserves the right to refuse any Sponsorship. For example, the University will refuse a Sponsorship that:
4.2.1 is in conflict with University policies, regulations or rules;
4.2.2 could disparage, impair, or adversely impact the mission, reputation, image, integrity, or best interests of the University;
4.2.3 appears to create an Endorsement by the University of a particular company, product, political candidate or position regarding public policies;
4.2.4 is considered to contain obscene, indecent or profane material; or
4.2.5 ridicules, exploits, or demeans persons on the basis of their race, color, religion, sex, sexual orientation, actual or perceived gender identity, age, national origin, disability, veteran status, or genetic information.
4.3 The University prefers and recommends Qualified Sponsorships rather than Non-Qualified Sponsorships, Advertising, or Endorsement arrangements, which require onerous and significant accounting and record-keeping obligations, implicate UBIT reporting, calculations, and payments, and may implicate applicable law, including restrictions on endorsement or promotion of products or companies.
4.4 A Qualified Sponsorship payment may be in the form of money or in-kind goods or services.
4.5 An Acknowledgment of any given sponsorship relationship or agreement may not include an Endorsement by the University or University Entity.
4.6 This Regulation applies to all forms of Sponsorships, including web-based Sponsorships and Acknowledgments. Links to sponsor web sites should be to the sponsor’s home web page. University PRRs regarding appropriate use of information technology resources, such as NCSU POL 08.00.01 and REG 08.00.02 Computer Use, may also apply to web Sponsorships and Acknowledgments.
4.7 NCSU RUL 01.25.01 Trademark Licensing Rules applies when a University Entity uses a sponsor’s name and/or logo together with a University name and/or logo in an Acknowledgment or in the marketing or promotional materials for the sponsored activity.
4.8 Sponsors may only use a University name, trademark, logo or mascot with permission from the Assistant Vice Chancellor for Strategic Brand Management or designee and in conformity with NCSU RUL 01.25.01 Trademark Licensing Rules.
4.9 NCSU POL 03.00.02 Criteria and Procedures for Naming Facilities and Programs applies when a Sponsorship involves the naming of a University facility or program.
4.10 The Assistant Vice Chancellor for Strategic Brand Management will be present on any University Entity-specific Request for Proposals where sponsorship or marketing value could be a portion of agreement with the potential vendor, as determined by University Communications and Marketing and Procurement Services.