Vancouver, (August 1st, 2018) – I have found that there is a great deal of confusion and outright fear when proposed partnerships involve VIK, or value-in-kind. For those not familiar with this term, VIK is a product or service a partner may provide in addition to, or in lieu of a cash contribution. It has enormous potential value to a wide range of properties and should be embraced if done well.
I was first educated in the world of VIK when working on the Vancouver 2010 Olympic and Paralympic Winter Games. The products and services provided by our partners not only supplied a critical revenue stream for the organization (by allowing us to avoid costs that would have otherwise been a cash expense), but it also fulfilled our very specific, and in many cases very demanding needs for everything from vehicles to fuel, tents, beds, office furniture, computer hardware, uniforms, and even medals!
My experience was very similar when working on the Toronto 2015 Pan/Parapan American Games where our partners once again helped us to literally deliver the Games through their expertise, and world–class products and services.
In-kind value played a critical role for these events, but you don’t need to be running a major multi-sports Games to take advantage of this unique form of investment. Of your 10 largest expenses, what could a partner help you with – in whole, or in part? When advising properties, I always ask them to complete this review.
In today’s competitive sponsorship environment, you need to be creative in who you partner with, but you also need to be creative in how partnerships are structured. Of course everyone is looking for the ultimate flexibility that a cash investment provides, but don’t miss out on other ways to off-set direct expenses while also allowing your partner to showcase what they do best.
When exploring partnerships that include VIK, a few important things to remember:
- Only entertain products and services that will relieve a budget line item. Jellybeans are great but they don’t help the bottom line.
- In limited cases, you may wish to make an exception when the contribution helps to make your event better. It may not drop to the bottom line immediately, but be open to the odd opportunity that elevates your profile or customer experience, hopefully driving additional revenues in the future.
- When assigning value to a VIK contribution, you should use the value other clients are paying your partner for a similar product or service, and in similar volumes.
- You must know the scope of your need. This exercise is no different than procurement but instead of cash, you are paying in rights and benefits so treat it as such.
I hope this helps in your thinking about potential new sponsorship opportunities. Keep these potential challenges in mind, but don’t miss out on what can be a tremendous, and mutually beneficial way of approaching true partnerships.
If you have any questions about how you can incorporate value-in-kind elements into
future partnerships, contact us at email@example.com