Sponsorship Guidance

Arranging sponsorships: how to set up a sponsorship

1. Policy review

Before establishing a sponsorship, please review policy UW-204.

2. Student organization sponsorship

The University does not prepare or sign sponsorship agreements for Registered Student Organizations. RSOs should consult the contracting guidelines in the Student Organization Resource and Policy Guide for pointers on entering into sponsorship agreements. While certain aspects of the university’s sponsorship policy only apply to university schools, colleges, departments and units, the provisions in UW-204 relating to unacceptable sponsorship, prohibited endorsements, and use of university trademarks and images apply equally to RSOs.

3. Qualified sponsorship

• Qualified sponsorships are the most straightforward to process since there is no arrangement or expectation of a “substantial return benefit” to the sponsor in exchange for the contribution. However, campus units often offer incentives to sponsors when soliciting sponsorship. If the value of the incentive exceeds 2% of the amount of the sponsorship the IRS considers it a substantial return benefit. This has possible tax implications for UW and the sponsor. See section 4 below for more details.
• If the sponsorship is in the form of a financial contribution and does not involve a substantial return benefit, a school, college, department or unit may enter into a sponsorship arrangement by providing the sponsor with a letter that summarizes the nature and duration of the sponsorship and the specifics of the qualified acknowledgment (Attachment A), and attaches the standard sponsorship terms and conditions (Attachment B). Both the letter and terms and conditions require review and completion by the unit before being sent to the sponsor. Once the sponsor signs and returns the letter, no further approvals are needed.
• If the sponsorship is a gift-in-kind, see section 5.
• Examples of benefits that can be provided in a qualified sponsorship arrangement:
  • Acknowledgement of sponsorship (see below)
  • Product displays. Distribution of a sponsor’s product by the sponsor or the unit to the general public at the sponsored event, whether for free or for remuneration is not considered an inducement to buy, sell, or use.
  • Exclusive sponsorship arrangements (see policy UW-204)
  • Disregarded benefits – goods or services provided to the sponsor with a fair market value that is not more than 2% of the amount of the sponsorship payment.

4. Non-qualified sponsorship

• If the sponsorship is a financial contribution and involves a substantial return benefit to the sponsor, the unit’s business office should review, with input as needed from the Tax Compliance Manager in the Division of Business Services, before formalizing the relationship. This is to determine whether there is Unrelated Business Income Tax (UBIT) or other implications related to the nature of the return benefits. As part of that review, a determination will be made about the nature of any written agreement that will be required. The monetary value received by the university in exchange for the substantial return benefit provided to the sponsor is income, and must be deposited into an appropriate account consistent with the Revenue Accounting policy, UW-3029.
• Units must manage their accounting so they know the fair market value of any substantial return benefit to the sponsor.
• If the sponsorship is a gift-in-kind, see section 5 in addition to obtaining the above-outlined review.
• Examples of “substantial return benefits” excluded from qualified sponsorship (see policy UW-204 for details):
  • Advertising
  • Exclusive provider arrangements
  • Goods or services that have a fair market value of more than 2% of the sponsorship payment

5. Gifts-in-kind

When a sponsorship arrangement includes a gift-in-kind of products (not services), policy UW-3009, Gifts in Kind, applies.

Depositing funds with the University of Wisconsin Foundation

1. The Wisconsin Foundation Alumni Association (WFAA) is the official fundraising and gift-receiving organization for the university. A sponsorship payment in support of a UW event or program, or any portion thereof, which is a either a qualified or non-qualified sponsorship payment may be directed to WFAA for deposit. For non-qualified sponsorships, only the portion that exceeds the fair market value of the return benefit received by the sponsor may be considered a tax-deductible gift.
2. Units need to alert WFAA ahead of deposit so WFAA can manage gift receipts for the sponsor.
3. For non-qualified sponsorships deposited at WFAA, the fair market value of the return benefit received by the sponsor must be moved from WFAA to a campus revenue account as soon as possible.
4. Units must manage their accounting so they know the fair market value of any substantial return benefit to the sponsor.

Acknowledgments

1. Acknowledgment of the sponsor must be secondary and subordinate to the name, marks, and other representations of the UW–Madison school, college, department, unit, program, or event to which the sponsorship relates. For example, a banner promoting a departmental conference should prominently identify the conference and the department, with sponsor logos or other acknowledgment placed on the bottom of the banner in a smaller script.
2. Acknowledgements may not suggest endorsement of the sponsor by the university or unit, and may not make qualitative statements (e.g., suggesting that the products or services offered by the sponsor are superior to competitors).
3. Institutional or unit-specific policies may restrict locations on institutional websites where acknowledgments may be placed.