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Sponsorships and Donations: What’s the Diff?

Wednesday, February 27, 2013
Grantseeker Monthly
Grant Connect

According to The Canadian Sponsorship Landscape Study (CSLS), charities are too often misinterpreting the objective of corporate sponsorship.

“There is an enormous disconnect that we see in the data between what a sponsor expects and what [the charity] delivers,” explains Norm O’Reilly, Associate Professor at the University of Ottawa and Lead Researcher on the CSLS. “Charities are not viewing [the money] like a sponsorship; they’re viewing it like a donation.”

The Continuum

This confusion between sponsorship and donations is not surprising given all that they have in common:

  • Corporations receive a tax benefit for both a donation or a sponsorship
  • Both donations and sponsorships can improve the brand image of the corporation (e.g., enhances the reputation of a corporation among its consumers, etc.)
  • Both can have positive effects on employee morale

Professor O’Reilly describes sponsorship and donations as being on a continuum, where one end is pure corporate sponsorship and the other, pure philanthropy. “Both of which are relatively rare, and there is some element of the two in-between.”

The Sponsorship Objective

Pure sponsorship is when cash or an in-kind gift is given in return for a specific commercial benefit. When done well, it is mutually beneficial for sponsors and charities alike.

The real thing sponsorship provides…is the ability to transfer images through the association between the two parties,” says Professor O’Reilly.  ”That’s how sponsorship works in its best scenario, the brand image of the sponsor and sponsee are transferred, and then we as consumers associate those images with the product. That sets to change the brand in the short term or the long term, leads to positive word of mouth, and sales.”

“Out of this World” Sponsorship

On October 14, 2012, Felix Baumgartner transcended human limits. Supported by a team of experts, Felix ascended to 128,100 feet in a stratospheric balloon and then made a free-fall jump rushing toward earth at supersonic speeds. His feat truly redefined the limits of “cool”.

What does this have to do with sponsorship? Google Felix Baumgartner and you are guaranteed to see the name Red Bull. The Red Bull Stratos Mission has ten sponsors detailed online, but the most prominent partner is the well-known energy drink (whose tagline is appropriately “Red Bull gives you wings”).

This is a “stellar” example of great sponsorship because the images we associate with the Red Bull brand and the Stratos Mission – energy, high performance, flight – reinforce one another, ultimately strengthening both brands. In an interview with Forbes Magazine, Ben Sturner, President and CEO of Leverage Agency, went a step further and called it perhaps one of the greatest marketing stunts of all time: “The value for Red Bull is in the tens of millions of dollars of global exposure, and Red Bull Stratos will continue to be talked about and passed along socially for a very long time.”

Is sponsorship right for you?

If your charity is pursuing sponsorship for the first time, do your homework before going too far.  For many organizations, the revenue generated by corporate sponsorship just isn’t worth the time they invest in building and maintaining the partnership. “The things charities could have done in the meantime – they could have run an event or hired a fundraiser and made that money ten times over,” explains Professor O’Reilly. “Board of Directors are vastly underestimating how difficult [sponsorship] is.”

To learn more about best practices in corporate sponsorship, we recommend checking out some of these free online resources:

 

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This blog post was featured in Grantseeker Monthly, the e-newsletter of Grant Connect. To receive monthly fundraising tips, blog posts, and interviews with funders, register for this free e-newsletter!

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