Sponsorship is a fact of life—and an important revenue stream—for many associations and other nonprofits. But could sponsorships be putting some negative marks on your brand? A recent study published in the Academy of Management Journal suggests that the answer is yes.

The study, “When Does Medici Hurt DaVinci? Mitigating the Signaling Effect of Extraneous Stakeholder Relationships in the Field of Cultural Production” [subscription], looked at that question specifically as it pertained to Russian theaters. The researchers, Yuliya Shymko of Belgium’s Vlerick Business School and Thomas Roulet of the School of Management and Business at London’s King’s College, found that, for every corporate sponsor a theater had, it was 10 percent less likely to receive a nomination for the Golden Mask award, the highest professional honor in the Russian theater world.

This point translates elsewhere, of course. In a Harvard Business Review article describing the research, Shymko and Roulet highlighted the saga of the Royal Opera House in London, which stoked controversy in the theater community and among the broader public after it accepted corporate support from the oil industry giant BP.

“In other words, corporate donors may provide a recipient with crucial resources, but accepting this financial support makes the beneficiary less likely to be recognized as artistically and culturally valuable,” the researchers wrote in HBR. “This in turn reduces the visibility and reputational benefit of the donor’s gift; after all, most donors want to been seen supporting the very best cultural institutions.”

That sounds like bad news for nonprofit organizations that need corporate support for their missions. But it also comes at a time when many corporations are increasingly speaking up on social issues, driving greater interest in social sponsorships across the board.

In a Nonprofit Quarterly analysis of the study that extrapolates beyond cultural institutions, Common Impact CEO Danielle Holly suggests that nonprofits take care when considering the advice suggested by the study, including that sponsorship funding be directed toward specific programs.

“Nonprofits would be better served by incorporating this study’s findings as one of the many inputs they weigh when considering a corporate partnership, looking at two factors in particular,” Holly writes.

Those factors? First, analyzing how philosophically comfortable the organization is with teaming with a specific corporation; and then, analyzing what conflicts of interests the partnership could create down the line, addressing those concerns as needed.

Has your association taken on corporate sponsorships, and have they raised ethical issues for your organization? Offer your thoughts in the comments.

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