A.T. Kearney has commissioned Academy artists to do portraits of its clients, such as Reuters

City firm A.T. Kearney, which has recently signed a three-year sponsorship deal with the Royal Academy of Arts in London, has gone one step further by commissioning its own exhibition.

As well as sponsoring the Summer Exhibition at the gallery, the management consultants hit on the idea of commissioning Academy artists to do portraits of its own clients, including Reuters, Rolls Royce, Marks & Spencer and BP.

The company said that it wants "to bridge the chasm between the worlds of art and commerce".

Seasonal events are also popular, particularly the Edinburgh International Festival, which gives companies the chance to emphasise their Scottish credentials.

Commercial benefits

The sponsorship scene has moved on considerably from 20 years ago, when companies donated to an arts foundation at the whim of their chairmen.

Now the commercial benefits of corporate sponsorship are widely recognised on both sides of the fence.

Arty facts for 1999-2000

Total UK business investment: �150.4m London generates largest sum of business investment (60%), followed by Scotland (12%) Most successful art forms in generating investment: 'Museums & Galleries' and 'Opera' Some 24 businesses generated more than �1m in investment Source: Arts & Business

"Business sponsorship of the arts is a mutually beneficial commercial relationship which has been shown to deliver a whole range of tangible benefits," says Russell Jones, director of operations at Arts & Business, which promotes partnerships between the two sectors.

Benefits for companies include the chance to promote brands, entertain clients, kick off a few deals amid ambient surroundings and provide perks for staff.

According to Arts & Business' head of marketing, Paul Brown, companies also use the arts to build links with their local communities.

"It is part of their social responsibility drive," he says, explaining that sponsorship deals often include educational outreach programmes for residents in deprived areas.

On the other side, arts organisations have become more savvy at tapping corporate funding, resulting in greater competition within the sector.

The Royal Academy, though pleased with the sponsors it has secured, recognises that "it's a competitive market out there and the economic slowdown is accentuating that".

Major player

The biggest trendsetter in arts sponsorship is widely acknowledged to be the accountancy firm Ernst & Young.

Ernst & Young is sponsoring the Vermeer exhibition at the National Gallery in London

The company has done its fair share to put corporate sponsorship on the map, and took part in one of the largest arts sponsorship deals in the UK - "Monet in the 20th Century" at the Royal Academy - two years ago.

Ernst & Young's brand certainly got quite a bit of exposure, as the show proved to be the most popular art exhibition ever held in the UK.

The company also boasted that it has entertained almost every FTSE 100 chief executive during a single season.

And in London today, it would be hard to miss posters for the latest Vermeer and Delft School exhibition at the National Gallery, also sponsored by Ernst & Young.

Scottish branding

Although London attracts about 60% of corporate money invested in the arts - the equivalent of �80m in 1999-2000 - other areas are slowly catching on.

The Edinburgh Festival helps to promote Scottish brands

The next region behind London is Scotland, which captured 12% of arts investment, or �16m, during 2000.

The three-week Edinburgh International Festival contributes a fair amount, raising �1.7m last year from sponsorship that was mainly corporate.

It expects to raise about the same this year, says sponsorship director Nicky Pritchett-Brown.

The Festival attracts big names such as the Bank of Scotland, which is sponsoring a series of chamber music concerts each morning, as well as smaller local sponsors.

Many companies involved, including Scottish & Newcastle, Scottish Life and Scottish Widows, are keen to underscore their association with the region.

Others like BT use the Festival as an opportunity to target Scottish clients - former chairman Sir Iain Vallance was a familiar face in past years.

Cloudy forecast

I am worried year-on-year and I am really worried about next year

Nicky Pritchett-Brown Edinburgh International Festival

The only clouds on the horizon are the economic slowdown's impact on marketing expenditure and a bout of corporate mergers that have slashed company budgets.

"I am worried year-on-year and I am really worried about next year," says Ms Pritchett-Brown.

"Sponsors such as NEC are concerned about their business sectors and their dependence on the growth of the economy - certainly we can't be guaranteed of anything."

At the end of July, electronics firm NEC confirmed that it would cut 4,000 jobs worldwide, including 600 in Scotland.

Too early to tell?

Mr Brown at Arts & Business says it is too early to count the cost of a downturn, but points out that arts sponsorship remained relatively buoyant during the last recession in the early 1990s.

"The rate of increase slowed, but there was not a terrible fall-out," he says.

And he adds: "As the arts regularly demonstrate their contribution to the bottom-line as well as their impact in improving the lives of so many people in the communities... then we hope that arts sponsorship will weather any future recession in the same way it did the last."

Although most of London's arts establishments have sponsors in the pipeline for upcoming shows, their marketing directors will be braced for any downturn in a market that is becoming increasingly competitive.