Hardie sees this evolving relationship transcending traditional sponsorship, where a company pays money to have its logo splashed everywhere. "First off, it's about the association of first-rate brands witheach other. Secondly, it concerns UBS being an active patron, allowing LSO to do things it couldn't otherwise have done." Nevertheless, the bank is not adverse to more blatant branding exercises. The transformation of London's Tate Modern last year was known as the "UBS rehang" after the bank agreed to stump up an undisclosed sum to the achingly hip gallery over three years. In return the rehang bears the bank's logo and UBS's own collection of photographs will be displayed in two rooms at Tate Modern, to be accompanied by drawings and paintings. UBS previously sponsored Lucian Freud at Tate Britain in 2002 as well as the photography exhibition Cruel and Tender at Tate Modern in 2003. UBS's dealings with the Tate illustrate the current state of affairs where deep-pocketed companies tend to stalk the best-known art 'brands'. The Tate group gets far more private income than any other British gallery or museum, receiving around €9m a year from the likes of UBS, Unilever (which sponsors Tate Modern's Turbine Hall installations) and BP, which has given roughly €12m over 15 years. Other companies get their logos above the door by sponsoring individual shows: the financial services firm Aviva backed last year's Henri Rousseau exhibition and HSBC, the Frida Kahlo. One HSBC director, John Studzinski, who is also a Tate trustee, remarked at the time: "We did Kahlo because we saw it as a commercial opportunity for the bank." Most of the paintings for the show came from Mexico, where HSBC happens to be the fourth-largest financial institution.

Tweedy says that when Arts & Business was set up it was regularly approached by businesses that felt that they ought to be doing something worthy. 'Now, however, there is very much a feeling that this is a real commercial activity for businesses,' he notes. 'While individual altruism has increased recently, corporate sponsorship of the arts is actually driven by hard commercial decisions.' Sponsoring the arts is a much cheaper proposition than sponsoring sport. Ernst & Young is one of the biggest sponsors of the arts in the UK, and its logo is emblazoned over the current Rodin exhibition at the Victoria & Albert Museum in London. Says Tweedy: "They would typically pay between €550,000 and €900,000 for a blockbuster exhibition, sometimes up to a million-plus. Not only is this cheap compared with advertising, according to E&Y chief executives I've talked to over the years, it is actually the most cost-effective use of money." Which might well be why the biggest sponsors of the arts now tend to be financial institutions – banks and insurance companies such as Citigroup, Deloitte, JP Morgan and BNP Paribas; basically, the ones tightly controlled by bean-counters. Deutsche Bank, for example, owns the world's largest corporate collection of contemporary art and sponsors several bodies, including the Berlin Philharmonic Orchestra. France's EDF, one of Europe's largest cross-border energy groups, is a huge arts sponsor too, as is Telecom Italia. Tellingly, many of these concerns are privatised companies and seem not only to think it is a good thing for their brand, they also relish the opportunity to be seen to be doing something good for the community. This is an extension of the tradition in Europe where corporate behemoths such as Renault or Fiat or the banks sponsor major restorations or arts or architectural projects. Italian industrial group Olivetti organises major exhibitions, restores frescoes and other architectural treasures, and finances art exhibitions throughout the world. Culture and commerce is blurring further in the €100m art centre being built by Louis Vuitton Moët Hennessy and designed by Frank Gehry. The Louis Vuitton Foundation for Creation is scheduled to open in late 2009 when its 6,038 m2 of exhibition halls will present modern and contemporary art, as well as original commissions produced specifically for the space. The foundation's artistic director will be Suzanne Pagé, formerly director of the Musée d'Art Moderne. Other private contemporary art museums in the French capital include the Cartier Foundation, designed by Jean Nouvel, and the Maison Rouge, located near the Bastille and founded by art collector Antoine de Galbert.

But it is not just household names that recognise the merits of arts sponsorship. London law firm Herbert Smith was the National Portrait Gallery's 150th Anniversary Partner last year, building on its sponsorship of two previous exhibitions at the Gallery, Cecil Beaton: Portraits in 2004 and Lee Miller: Portraits in 2005. The company's marketing manager, Rebecca Hunter, stresses that "in addition to the brilliant client entertainment and branding opportunities that our partnership with the gallery provides, our sponsorship programme is an important element of the firm's broad commitment to its staff and community." Arts & Business estimates that companies spent roughly €1bn on sponsorship of the arts in western Europe in 2005, the last year for which records were available. The French arts were the largest recipient, with around €440m – although this included the sponsorship of several big music festivals – then Germany with around €400m, and then the UK with around €175m. Sir Christopher Frayling, chairman of the UK Arts Council, is sanguine about the shift from the boardrooms to the galleries. "It's a mixed model everywhere these days. Most institutions are one-third government, one-third box office and one-third corporate sponsorship. You fight a constant battle between what one side wants and what the other side wants, but a good negotiation results in a winwin situation." UBS's Hardie "categorically rejects" the notion that his company is "giving something back, because it implies that we've taken something out – but we do believe in making our skills available to help communities stand on their feet". He adds: "There are a decreasing number of increasingly large corporations in the world and over time this is not sustainable unless those corporations get more involved in the communities around them." UBS, like most chequebook-wielding benefactors, says that while there is no way to scientifically link sponsorship and sales, the practice works nonetheless. UBS also sponsors upmarket pursuits such as golf and sailing, and is convinced that its programme's reach has been tremendously successful at raising brand awareness. But Hardie reiterates that it means much more than sales – it means tickets to big events for clients and journalists, incentives or treats for staff, corporate and social responsibility initiatives and only then brand building. "All those things have shown a steady increase," he says. Some arts sponsorship, however, appears to be more lucrative than others. Last year's Turks exhibition at London's Royal Academy was sponsored by Turkish companies Aygaz and Garanti bank, and its opening coincided with Turkey starting intense discussions about joining the EU. Last year, a few Chinese companies plus others with Chinese interests backed the RA's China exhibition. This exhibition was brought forward (from January 2006, to November 2005) to coincide with China's President Hu Jintao's state visit to the UK.

The clever part in such a competitive market, says Tweedy, is bagging the right event – "either a travelling blockbuster or something which has glamour that can rub off on your business". Increasingly populist Japan's Nippon Television Network recently refurbished the Mona Lisa room of the Louvre, and the English National Opera is sponsored by Sky/Artsworld and furniture giant MFI, two British companies anxious to improve their downmarket image. Montblanc, which has diversified from pens to a 'younger' range of leather goods, is well aware of the value of aligning itself withevents and individuals who are perceived to be cool but not too edgy to alienate core customers. Zandra Rhodes may still look crazy, but 40 years after hemlines first rose past thigh level, she is very much a mainstay of the cultural establishment. Similarly, classical music events are rarely controversial and transcend language barriers, while an increasing number of fine art exhibitions tour the globe. As Rhodes' museum, and indeed her career, illustrate, fashions do come and go, but it looks as though sponsorship of the arts is set to remain in vogue for some time to come.