Corporate philanthropy and corporate sponsorship. It all comes from the same place, so what’s the difference, right? The truth is there are big differences. It pays to understand them so that you can position yourself for maximum corporate investment without compromising your organization. The line between philanthropy and sponsorship has become increasingly blurry. Here’s a quick primer to help you navigate these murky waters:
Philanthropy = a charitable gift to support the mission and programs of your organization. Philanthropy is contributed income.
Sponsorship = the provision of cash, products, or services in return for the commercial potential associated with your agency. Sponsorship is earned income.
A lot of people place considerable weight on where in the corporation the money is coming from to determine if it is sponsorship or philanthropy. But, really, it’s all about the deliverables. If, in receiving a corporate contribution, you are focused primarily on serving your clients and reporting program outcomes to the corporation, then the gift is philanthropy. You may be offering some forms of recognition, much like you do for individual and foundation donors, but that doesn’t make it sponsorship.
On the other hand, if you are focused primarily on fulfilling sponsorship agreements such as media buys, signage, logo placement, etc. and communicating very little, if at all, about your client services, then it’s definitely sponsorship. In recent years, sponsors have placed increasing emphasis on “activation” — ways to bring the sponsorship to life. Where it used to be enough to put a Toyota logo on a sign somewhere, now you need to have a Prius on-site and let lots of people sit in it. This is smart marketing, but it can mean a lot of extra work for a sponsored nonprofit.
The crux of the matter is this: when making a philanthropic gift, a corporation wants to help your people. When investing in a sponsorship, a corporation wants to sell to your people, whether those people be your clients, your board, attendees at an event, or other people who are somehow affiliated with your brand.
There’s room in every nonprofit’s portfolio for philanthropy. Whether you have room for sponsorship or not depends on your capacity to provide deliverables that are outside the scope of all the work your agency needs to do already. When you receive sponsorship dollars, they must first be spent on fulfilling the sponsorship agreement. What’s left over is unrestricted, which is nice, as long as there’s enough left over to warrant all the work you’re putting into the sponsorship relationship.
If you’re worried about missing the sponsorship boat, consider that corporate philanthropy (including in-kind contributions) represents $14 billion per year. Every penny of that goes to nonprofit organizations. Corporate sponsorship represents about $11 billion per year. Most of that goes to sporting and entertainment events and only a small fraction lands in the nonprofit sector. There’s definitely more money to be had from philanthropy.
On May 11, Front Range Source will be hosting an interactive panel discussion entitled “Partners for Good: A Conversation with Corporate and Foundation Funders.” If you’d like to hear straight from the source about how corporations think about philanthropy and sponsorship, click here.