Governance: Guidelines for Corporate Relationships
In the past royalty revenue spending has not been specifically guided by policy but in practice royalties have been used as needed for operating revenue for ongoing program support. This practice proves challenging in the case where royalty revenue trends begin to decline and tough decisions need to be made during budget planning, and determining how to “right-size” ongoing program budget allocations and use of reserve funds for operations versus special projects.
Lamaze International has entered into various corporate licensing partnerships, which license use of the Lamaze trademark on consumer products, such as infant development toys and books, children’s wear, maternity intimate apparel, and content partnerships. These corporate partnerships, and related licensing royalty revenue, exist to provide ongoing support for the mission and goals of Lamaze International’s charitable purposes.
This policy provides general principles for assessing corporate licensing partnerships and guidelines for managing ensuing royalty revenue for financial planning purposes. This policy will be applied in connection with other financial policies, including the Net Asset Policy which provides guidance on management of Reserve Funds, Special Project Funds and the Investment Policy which defines how these Reserve Funds are invested.
This policy and guidelines should be reviewed at least every three years to assure their continued relevance to the policies and operations of Lamaze and to our business environment.
General Principles for Establishing Corporate Relationships
The following general principles provide guidance for appropriate corporate licensing partnerships:
- The Lamaze mission, vision and strategic priorities must drive the proposed activity.
- The Advertising Standards Policy will guide the type of appropriate corporate relationships.
- The corporate partnership must preserve or promote the public’s trust, professional integrity and positive awareness of the Lamaze brand, the profession of perinatal education, maternal/child health, and evidence-based birth practices.
Corporate Relationship Guidelines
The formation of corporate licensing partnerships must comply with the following guidelines:
- Corporate licensing partnerships will be reviewed and approved by the Board.
- Corporate licensing partnerships must be accompanied by a written agreement, reviewed by legal counsel, and signed by all parties involved. Minimum royalty guarantees, quarterly forecasts and liability risks associated with a corporate licensing partnership must be reviewed and addressed in the agreement.
- Lamaze International must review and approve all projects and products bearing the Lamaze name, trademarks or logo.
- Advertising or educational material to be distributed to the public or childbirth professionals must be reviewed and approved to ensure compliance with current policies and evidence-based practice. Lamaze retains editorial control over educational content produced as part of a corporate relationship. Corporate partners must not influence the content of Lamaze program or advocacy activities.
- Contracts will be reviewed on an annual basis for compliance with standards and reporting specified in the agreement.
- The Executive Director is responsible for coordinating the review of proposed corporate relationships, managing partnerships consistent with the approved policies and executed agreements, and reporting to the Board of Directors on all Lamaze corporate arrangements at least annually.
Royalty Management and Budget Planning
The Board of Directors and management must carefully manage the balance between current financial needs and future needs. The perpetual challenge is to decide how much of the available assets should be used to support ongoing programming, special projects, and what portion should be invested for the future. The mission, vision and strategic priorities will be used to guide prioritizing and decision making related to use of royalty revenue and budget planning.
Royalty Management/Budget Guidelines
The following guidelines will be used in annual budget planning:
- The Board will annually set a revenue target for Lamaze programs (excluding corporate partners) that generate revenue with the goal of striving towards becoming revenue neutral or profitable.
- The corporate partner will provide realistic/conservative annual sales/royalty revenue target for annual budgeting purposes and quarterly forecasts to reflect mid-year changes, which allows for Lamaze forecast adjustments with any expected variances.
- The annual budget will be developed based on the corporate partner’s minimum royalty guarantee or average royalty revenue over the past three years, whichever is higher, in the case where royalties are stable or growing. However, if royalties have been declining over the past three years, then a conservative assumption will be made to assume that trend will continue into the next budget year.
- These guidelines will be applied in connection with the Net Asset Policy which provides guidance on management of Reserve Funds, Special Project Funds.
- The royalty management/ budget guidelines will be reviewed every three years or upon significant changes to corporate partner relationships.
Approved: March 2005
Revised: June 2007, September 2008, August 2017