Let’s get right to the point. Corporate sponsorship and corporate philanthropy are not the same. They are different—very different. And no matter which one you are considering, you probably aren’t thinking creatively enough.
Typically, philanthropy is done by individuals, not companies, but some companies still give for the sake of giving expecting nothing in return. Actually, that is philanthropy, especially when it comes to the Canada Revenue Agency or IRS. Philanthropy, or a donation by a company, is a gift made to a charity with no expectation of anything in return—no event passes or tickets to a gala, no logo inclusion, banners, tweets, or posts. Nothing! Zilch! Nada! Philanthropy comes from the heart; donations should be altruistic.
Corporate sponsorship, on the other hand, is a business transaction. The sponsor pays/gives the sponsored property money. In return, the sponsor receives benefits that will help them make more money, be it through alignment with the property, through sales, brand development, PR/GR, or employee engagement and such. It is a form of marketing, and like buying social, digital, outdoor, TV, or radio, they receive something of value in return for their investment.
Many nonprofits spend A LOT of time procuring small sponsorships. Typically, this might look like a lower-level sponsorship of an event. For a couple thousand dollars, the nonprofit has agreed to manage a long list of value in return: logos, seats at tables, program ads, speaking roles and other agreed upon benefits that can lead to a pretty high headache-to-reward ratio. My challenge to fundraising teams: how might you think BIGGER about sponsorships? How are you limiting yourself by getting stuck in this small transactional space?
Here are some stories and case studies that illustrate what I’m talking about::
- Story #1: A Case of Mistaken Identity: I was with a brand / sponsor. They expressed to me that their “investment” with a hospital foundation was not delivering the ROI they had hoped for. They had agreed to a donation and took a tax receipt, but they had wanted an announcement, some fanfare, publicity, and PR. Brands / sponsors need to understand that if they want ROI, they should do a sponsorship deal. If they want to just feel good, promote internally, and contribute to a worthy cause, then they should make a philanthropic gift — but not expect ROI. This brand / sponsor gave a philanthropic gift and then expected sponsor benefits in exchange. That’s a recipe for disappointment all around.
- Story #2: Un-Aligned Sponsorship Expectations: Another case I heard was a brand / sponsor that had bought a sponsorship, but really did not feel that they got the value they had wanted. They were complaining about the fact that they had invested $25,000 in a gala sponsorship and just gotten logos, tickets, name mentions, and banners. They had asked for more specific assets, such as a speaking opportunity, a chance to sample product (a high-end gift for attendees), and content in the quarterly newsletter. But they asked for all that after the fact. They were told they could not have those assets and their “package” was set. I told them it was their problem and fault, not the fault of the charity. If you cannot get what you need, don’t buy the product! They accepted that, but it was the last time they sponsored that event. It’s best practice for BOTH parties in a sponsorship conversation to get very clear before agreeing to work together.
- Story #3: How Less Clutter and Simplified Thinking Saved the Day: Here is an example where a sponsorship worked great after the charity learned from what wasn’t working. This was a national charity with an annual fundraising run. Historically, in each market, volunteer hours were spent begging local businesses to give them product to put in the run participants’ registration bag. Each market had a minimum of 1000 runners so that meant each business had to have a coupon or product for 1000 bags. They charged the businesses nothing because they were trying to build value for the participants by having lots of stuff in the bags. In reality, most runners threw the bags and contents away, and the recall on the offers from the bags was low. What the charity realized was that the runners weren’t there for the “great stuff” offered in the registrant bag… they were there either for the run or the cause. The charity changed the format so that only sponsors who were investing a minimum locally of $1500 could have the right to sample a product in the registrant bag. The bag went from 25-30 items down to 5 or 6 items. Sponsors had to pay to be in the bag now. Registrants saw less product, but they actually started looking at it — and it was of greater value to them; the redemption rates were about 3 times as high as when those sponsors put it in for free and were in a clutter of 25-30 other products in the bag. The result: each of the local evets were now raising $7,500 to $8,500 cash – this is cash to those events which they had never gotten before. There were no complaints or negative feedback on less “stuff” in the registrant bag. Also, less volunteer time was spent collecting product and stuffing the bags. And with 100 runs across the country, the total new source of revenue meant $750,000 additional cash dollars to the cause. It was a win-win for the sponsors and the charity. This is true sponsorship that works. Here the charity shifted their thinking from “asking or begging” the business to help them by providing product for the bags to showing the business how the run could actually help them drive traffic to their business and then charging them for the right to reach this audience. Costco charges all those companies who sample food (or before COVID used to sample food) to sample their food to Costco customers… why are you as a charity not charging for the same exposure?
- Story #4: Another Success Story: And here is another example of a true partnership that delivered the ROI desired. It was a between a post secondary institution and an alumnus who owned a car dealership. They went through the major gift process and after 18 months, the school got a $15,000 major gift from the alum. When they better understood sponsorship along with philanthropy, they went back to see that alumnus with a new and creative idea. Together, they built out a sponsorship marketing program for the dealership that offered great discounts to graduates who bought a car from this dealership. The dealership used their marketing budget to invest $20,000 a year (and still running after 7 years… at a higher level now) to help them sell cars through this program, which includes a college hockey team sponsorship along with a social media campaign. The dealership tracks the ROI so they can see that it sells cars to this audience really well. What the school has now: instead of a single $15,000 major gift, they receive an “annual” contribution of $20,000 a year for multiple years. We also know that the alumnus made a substantial personal gift several years. This scenario shows how some creativity and big thinking can design a program that really benefits both parties.
We need to understand sponsorship and philanthropy are different and treat them accordingly. And we need to think bigger and more creatively – in ways that go well beyond logos and speaking opportunities if we want real money from business-nonprofit partnerships.
Brent Barootes is the President and CEO of Partnership Group – Sponsorship Specialists® an integrated sponsorship marketing agency that works with both sponsors (brands / companies) and properties (those selling sponsorships and looking for money such as charities, non profits, pro and amateur sports, municipalities and such) to help them both put more money on their bottom lines. Brent has been with the Partnership Group – Sponsorship Specialists® since its start up 20 years ago and has been working directly in the sponsorship and charitable / non profit sector for over 30 years working both as a Director of Development for a national charity and working in professional sports from a sponsorship perspective.