Earlier this week, I attended the DonorPerfect conference (#dpcnc on Twitter). I went to this sponsorship workshop that I’m still marveling at.
What should you know about sponsorship, and how is it different from Cause marketing or co-ventures?
There are big differences between Charitable contributions, cause marketing, and commercial co-ventures.
Charitable contributions are when the corporation just gives the nonprofit something.
Cause marketing is when they do something and you do something,
Commercial co-ventures include a product that they make that they give you a percentage of. Such as when Komen partners with Swiss Army knives.
Or when Nike and the Livestrong Foundation get together and make a shoe with little bikes on the bottom and the Livestrong colors, which, when you buy it, partially benefits the Livestrong foundation.
Check out the Continuum of engagement.
Your nonprofit should be able to provide at least two of these:
Incented giving, trade in kind, or sponsorship.
Corporations can give you
- Incentive Giving
- Commercial Co-ventures
There is this thing called “UBIT” or Unrelated Business Taxable Income.
- Income from Trade or Business
- Regularly Carried On
- Unrelated to your charitable mission
It’s unlikely if your charity is passive.
Joint ventures jeopardize exempt status.
Since the Livestrong foundation isn’t in the shoe business, this partnership, unrelated to their charitable mission, is okay.
If you partner with a restaurant to get a percentage of their proceeds for a weekend, that is outside of your normal charitable activities, and mission, so that’s okay.
If you start to set up shop as an event space and that is the entirety of your charitable activity, just because you want to get out of having to pay for a liquor license or something, that is not okay.
Do your homework
Are you the right category for them? Are they the right category for you?
- How committed are they?
- How is it structured?
- Who benefits?
- How will we use the dollars?
- How meaningful is it? It comes down to mission.
One of the things I learned in this workshop is that you need to have a contract in place if you do sponsorship or cause marketing. If this is a big, national company, and you ask for a minimum gift amount and a maximum, they won’t blink an eye. But if they are a smaller, local company, this could be the deal-killer.
For example, let’s say you’re a small nonprofit and you’re just starting out with cause marketing. If they agree to put up pinups in their grocery store or coffeeshop, you should make sure that if people spend $2 on the pinup, the company matches this, for a minimum amount of $5,000 and a maximum of $20,000.
Don’t give benefits until you have the contract.
If you would like to see my first post on what you should know about sponsorship, click here