Step one in the pricing decision process for a nonprofit organization is the development of a complete inventory of all the benefits your organization might potentially offer to sponsors. Step two calls for you to come to grips with which benefits you are comfortable actually offering to prospective sponsors. Step three requires that you develop a realistic budget of your sponsored event or program in order to see what sponsorship needs to contribute.

I can’t overstate the importance of this groundwork. Far too many npos look at sponsorship and think of placing a sponsor’s name on a program and perhaps organizing a modest reception after an event. They then think the job is done. Not by a long shot.

Let’s assume, however, that we’re all together on this point and now need to set the sticker price. There are three primary points to keep in mind at this stage: value, value, and value.

To illustrate the point, consider the example of a municipal nonprofit with an annual fall fund-raising festival incorporating the themes of youth (16+) and job skills development. The one-day festival offers food, crafts, and entertainment, all as showcases for the skills of youthful participants/beneficiaries. Attendance is projected at 5000. A preliminary budget has set the costs of production, advertising/promotion, on-site elements, and all other costs associated with the event at $15,000. The organization has a goal of raising $30,000 through the event. Let’s say that ticket sales, entry fees for participating organizations, and on-site sales are realistically projected to generate $12,000.

What can be offered to a lead sponsor and what sponsorship fee can be set? A dozen discrete benefits might be part of the package, but here are four benefits that might be offered and a way of calculating their value. After that, the fee is simply a reflection of value.

Title sponsor (with most prominent positioning on promotional materials, local newspaper ads, flyers, on-site banners, etc.)

• The value to the sponsor is a portion (between 30% and 80%) of the cost of advertising provided by the various sources. For three half-page ads in the local newspaper, usually priced at $3000, the value would be between $900 and $2400.

 

The opportunity to offer samples to 5,000 attendees

• This should be valued after comparison with local costs. Value can vary widely, depending on product type and cost, competitive environment, opportunity to purchase, and other factors. One estimate might be $0.20 per sampler. For 5,000 samplers, the value is $1,000.

 

Use of names/addresses collected through registrations, prize draws, etc.

• For 5,000 highly qualified names, the cost may well be $200 per thousand (50¢ each) to a corporation, or $1,000.

 

Community prestige: opportunity to use the name/status of the nonprofit organization in the corporation’s advertising, pr programs, etc.

• This one is less easy to quantify. Much depends on how important your `public’ is to a particular corporation. For a corporation wanting to associate itself with a youthful market, the festival audience in this example may be very valuable. At least one-half advertising value is considered a reasonable estimate by many sponsoring corporations. In this example, the value would thus be between $450 and $1200.

 

This information is not meant to be definitive, but is intended to guide your thinking as you put a value on the benefits your organization has to offer.

A couple of additional thoughts on pricing. First, never price your benefits in a vacuum. Confer with similar organizations; call on friends and acquaintances who work in advertising, marketing, and public relations; keep abreast of what fees have been charged for similar events. Remember: all these people and organizations are in the same business that you are when you put on your sponsorship hat.

Finally, keep the long term in mind. When discussing your property with a potential sponsor, be responsive to corporate needs. If you find that use of a list of attendees has little value for a particular prospect, for example, search for other ways to add value to your package – if not this year, then next time the event takes place. After the event, as you evaluate its effectiveness with your sponsors, make certain that you understand what elements of the sponsorship package were most valuable to them. Expand those elements and seek out similar benefits for next year. Then be sure to price them accordingly.

Judith Barker is publisher of The Sponsorship Report and consults with nonprofit organizations interested in exploring their sponsorship options. She can be reached at (416) 466-4714.