Sponsorship? Donation? Partnership? Corporate philanthropy? Does it really matter what we call it? The answer to the question is, “You bet it matters.” And the reason is very straightforward: The failure to understand the nature of a particular type of funding can lead to a failure to get the funds.
Not long ago, I telephoned the executive director of a cultural/educational not-for-profit organization with a national scope and a fine reputation. February has long been established as the month when this organization concentrates a number of its events and projects. I wanted to know what role corporate sponsorship would be playing this year in the organization’s funding of activities. “It’s very disappointing,” the executive director answered. “We’ve approached so many corporations, but the answer always seems the same. `Our donations budget is already committed.'”
Sponsorship is not charity.
Perhaps the donations pocket was indeed depleted in every case. But this would be irrelevant if the not-for-profit organization were truly seeking sponsorship. Those dollars come from an entirely different pocket.
The proposal for a sponsorship relationship is vastly different from the request for a donation. The contact point is different; the goals are different; the language is different. The accompanying chart is an attempt to highlight some of these differences.
In general, when seeking a donation, one appeals to the largesse of an individual or a corporation. When seeking a corporate sponsor, one has a solid business proposal to present. Both sources of funding can be productive, and certainly both require enormous energy, imagination, and perseverance on the part of the fund-seeker. But the savvy not-for-profit understands that corporations approach the sponsorship decision differently from the charitable giving decision.
Corporate decision makers
On the corporate side, sponsorship decisions are typically made in the marketing group which encompasses brand management teams, advertising people, and others concerned with selling product and services to customers. Other corporate groups may well be involved, or even take the lead – corporate communications, community relations, human resources, etc – but never make the mistake of thinking that the worthiness of your organization is of itself enough to satisfy the goals and objectives of these groups.
Are there hybrids?
Of course there are. Especially where large sums or complex funding requirements are involved. Or where a corporation continues under the leadership of a founding entrepreneur who is likely to make personal decisions on both sponsorships and charitable contributions. But this does not negate the importance of knowing the differences.
| What’s the difference? | ||
|---|---|---|
| Sponsorship | Charitable contribution | |
| Source within the corporation | Typically from marketing, advertising, or communications budgets. | From charitable donations or philanthropy budgets. |
| Publicity | Highly public | Usually little fanfare |
| Corporate accounting | Written off as a full business expense, like promotional printing expenses or media placement expenses. | Write-off is limited to 75% of net income. (This limit was increased in 1997 from 20%, so accounting/tax considerations are less likely to influence the way a corporation designates funding of a nonprofit organization. |
| Corporate objectives | Generally, to raise the profile of the corporation; to sell more products/services; to increase positive awareness in markets and among stakeholders (customers, potential customers, geographic community) | To be a good corporate citizen; to enhance the corporate image with closest stakeholders (i.e. key employees, shareholders, suppliers). |
| What corporations want in return | Except in the case of very small sponsorships, banners and a small acknowledgement on a program are no longer sufficient. Today, corporations look for everything from employee involvement to the opportunity to mix and mingle with other top level executives at other sponsor corporations. The best relationships are not `one off’, but develop and increase in value to both sponsorship partners over a number of years. | Appropriate gratitude; confidence that the charitable dollars are used responsibly. |
| Recipients | Events; teams; arts or cultural organizations, projects, programs. A cause is sometimes associated with the project. Increasingly educational institutions and other public sector organizations (parks, libraries etc,) are seeking sponsorship. | Larger donations are typically cause-related (education, health, diseases, disasters, environmental), but can also be cultural, artistic, or sports related. At times funding is specifically designated for a project or program; at times it is provided for operating budgets. |
| Where most dollars go | One of the fastest growth areas in sponsorship today is cause-related organizations. For now, however, sports (where sponsorship started) get over 50%. | Education, social services, and the health sector are reported to get close to 75% of charitable donations. |
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.
