Price check

The government is leaving responsibility for funding to big business. Will the arts suffer for it, a

This month, Tate Modern will unveil its first major rehang since the gallery opened in 2000. The Tate collection, which has to date been arranged around themed "hubs", will now be organised into roughly chronological groups: minimalism, cubism, surrealism and abstract expressionism.

Yet the reorganisation of artworks is not the only break with convention in evidence here. The transformation of Tate Modern has been trailed as the "UBS rehang", in honour of the project's sponsors, a huge Swiss-based bank. In a three-year deal, UBS has agreed to provide the gallery with an undisclosed sum (sponsors of the arts are notoriously diffident about specifying amounts of cash). In return, the rehang will bear the bank's name and UBS's own collection of photographs will be displayed in two rooms at Tate Modern, to be accompanied by drawings and paintings.

This is an interesting and somewhat controversial first for the Tate, which so far has made a point of not showing any of its sponsors' own art. Critics argue that prices of artworks in the UBS collection will be bumped up by virtue of display at Tate Modern, muddying the already murky waters between altruistic business sponsorship and hard commercial interests. In a publicly funded gallery, shouldn't artistic considerations always come first?

The good news is that the UBS photo-graphs are of a high standard and do in some way make up for the gallery's own rather small collection. Nicholas Serota, the Tate group's long-term director, has said that he will display private collections only if the individuals or firms concerned are already committed to supporting the Tate. UBS previously sponsored "Lucian Freud" at Tate Britain in 2002 as well as the photography exhibition "Cruel and Tender" at Tate Modern in 2003.

"We've had a long relationship with UBS and they then came to us saying they now wanted a three-year deal," says Andrea Nixon, director of development for the Tate Gallery. "We're not here to be a shop window for just anybody." Nixon also insists that it is the Tate's directors who do the picking and choosing.

The decision does, however, throw into relief some of the complex issues surrounding corporate sponsorship of the arts. Once a small add-on to state funding, sponsorship is a virtual necessity these days. "Thirty years ago, business sponsorship of the arts was worth £600,000 a year in total. Now it's worth more than £120m a year," says Colin Tweedy, chief executive of the so-called "marriage broker" organisation Arts & Business. Last year, individuals in Britain gave £244m to the arts and the total donated from private trusts was £88m.

The art world's increasing reliance on the private sector for funding creates a series of challenges. First, rich companies tend to be interested only in the best-known brands. The Tate group, for example, gets far more private income than any other British gallery or museum, receiving roughly £6m a year from the likes of UBS, Unilever (which sponsors Tate Modern's Turbine Hall installations) and BP, which has given about £8m over 15 years. Other companies get in on the action by sponsoring individual shows: the financial services firm Aviva backed the recent Henri Rousseau exhibition, while "Frida Kahlo" last year attracted HSBC.

Second, if not handled carefully, sponsorship can leave galleries open to accu-sations of kowtowing to commercial interests. One of the directors of HSBC, John Studzinski, is also a Tate trustee. He remarked: "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 is the fourth-largest financial institution.

At least Studzinski is upfront in seeing sponsorship as a business opportunity. The Royal Academy was not quite so open about the motivation for two of its big gest shows of the past 18 months, "Turks" and "China". A handful of Turkish companies supported "Turks", and its opening rather neatly coincided with Turkey starting serious discussions about joining the European Union - a move very much supported by Tony Blair. Last year, a few Chinese companies plus others with Chinese interests backed the RA's "China" exhibition. It was also canny of the RA to bring forward the opening, originally planned for January 2006, to last November - just when Hu Jintao, the Chinese president, would be in Britain on a state visit. In both cases, political and business interests took uncomfortable precedence over the artistic merits of the exhibition.

Tweedy is blunt about the thinking behind business sponsorship. "It's business, not altruism, and that's how it should be. Yet companies should also not believe they can influence the arts they support," he says. "Actually, here in Britain they know that the artistic community would bite off the hand which tried to feed them if they attempted to have a say in the show, exhibition or whatever."

There are, of course, also many success stories. Sponsorship from Travelex for the National Theatre has worked out very well for both sides, with the National pulling in a new, younger audience paying £10 per seat. And English National Opera would be in an even greater pickle without financial backing from a couple of unlikely lads - Sky/Artsworld and the furniture giant MFI, both of which seek to improve a slightly naff image by associating themselves with opera.

The government wants the private sector to increase its funding for the arts, and so the recourse to corporate sponsorship is inevitable. But this will require vigilance, to ensure that the sponsor keeps a supporting role and does not hog centre stage.

The Tate Modern rehang, sponsored by UBS, opens on 23 May at Tate Modern, London SE1 (020 7887 8888)