Sunday, September 12, 2010

All About Sponsors and Sponsorships as Donors and a Fundraising Method

How might nonprofits work or not work with sponsors?  What are sponsors, sponsorships, and how do we know if we want to try to raise sponsorships?  This post will give you answers.  We will  look at sponsorships, sponsors, relationships nonprofits may have with sponsors, and also why some nonprofits choose not to work with sponsors.

Sponsors are most often businesses, corporations, but also can be people or other entities (such as foundations, governments, etc.) that give a sponsorship to help finance something that the nonprofit seeking the sponsorships is going to do.  Sponsorships may be raised to help fund anything from a nonprofit's: programs, services, or products; or a fundraising event; to a new building or vehicle; to even an entire year's rent or anything else that the nonprofit will have to pay to provide or do.  Sponsorships, are yet another type of fundraising method, for nonprofits.  Like annual appeal campaigns, major donor campaigns, grant writing, or bequests, raising sponsorships is another option that any nonprofit may consider to help fund its work.

Nonprofits that request sponsorships usually offer an excellent opportunity to the business or corporation, in exchange for them donating the sponsorship.  In other words, there is a mutual benefit to a sponsorship, usually.  For instance, if a nonprofit, let's say, conducts a golf tournament, annually, and the two volunteer chairs of the special event are professionals in the local mortgage industry, and the co-chairs each enlist colleagues to participate in the event, each year; there is likely going to be several professionals from the local mortgage, construction, banking or finance, and other related industries at the event.  If you figure, too, that the two co-chairs get the event sold out, each year, the nonprofit, when it approaches potential new or previous sponsors, they can give real numbers of attendees, the demographics of the golfers, including a breakdown of which industries the golfers work in, and in which cities.  This information can be very compelling to say, local businesses that are interested in reaching professionals in this particular professional sector to advertise. 

For instance, perhaps a potential new sponsor is a large realty firm, a previous sponsor was a firm of property developers, and another new potential sponsor is the local cable company that provides Internet connectivity as part of its services offerings.  The nonprofit has both researched which local businesses have not sponsored the event before that would want to reach the golfers who work in the construction sector; and have also pulled together the compelling golfer statistics and data to make the case why the would-be sponsors would gain an advantage donating a sponsorship with this event because they would be advertising to potential new customers (the golfers) who work in a field that ties into the potential sponsors' professional fields.  Perhaps the sponsors are offered: a three inch ad in two of the nonprofit's quarterly newsletters (that go out to X number of households in Y geographic region - again, providing facts helps make a request compelling), large amount sponsors get prime 'real estate' on the cover of the event's golf course guide book, all solicitations for the golf event, and 6 ' x 4 ' signage with the business' logo at two holes on the golf course.  The lesser amount donors would receive ad packages like these, too, but perhaps no signage on the course, and their ads would be smaller and inside the book and brochures, etc.  This is how to make a win-win situation for all involved.  (By the way, the golfers have the benefit of a fun day out for a good cause; but they also get to network within their professional sectors and make new contacts or strengthen established ones).

Another way to work with sponsors is if a nonprofit hires an events business to put on a special event and that firm (rather than the nonprofit) acquires the sponsors of the event.  In a for profit situation, as this one, the sponsors are also called "underwriters" as they are underwriting some amount of the total cost to put the event on usually in exchange for advertising.  Again, usually sponsors are businesses related to what the event is about.  If a small nonprofit has hired an events firm to put an annual brew festival on, the sponsors may be a local brewery, a local beverage distribution business, a local grocery store, and local restaurants that feature the beers being served at the festival.   The only concern, on a high level, that I would have about a nonprofit hiring an events firm to put on a special event that is to be a fundraising method for the organization, for that year is; first, how much of the proceeds will actually go to the nonprofit (after a cost/benefit analysis is it worth hiring a firm to put on an event that the nonprofit could, itself?); second, is the nonprofit the entity establishing and maintaining the relationship with the sponsors (who are donors) or do the sponsors have the relationships with the the events firm, instead?  It would be a shame for the nonprofit to relinquish potential relationships with larger amount donors (who could also be developed to give more, in time, but only by the nonprofit as the events firm is only working on the nonprofit's behalf on this one special event - and are not fundraisers).  Whether this is a good scenario for all involved (i.e. win-win) depends on what the nonprofit's answers are to my concerns.  A nonprofit should always take their relationships with current or new donors as the lifeline that they are: a serious lifeline.

Some nonprofits choose to not work with sponsors, perhaps on one program but does work with sponsors for all other programs that it provides, or a nonprofit may entirely decide to not work with sponsors, at all.  For instance, perhaps a sports nonprofit, by virtue of the sport it supports, is a part of a regional league.  Perhaps all member organizations in the league are required to post the various sponsors' corporate logos at the sports event's playing field or arena, as all member organizations in the league receive a certain portion of the total sponsorships raised, each year.  Perhaps the leadership of this nonprofit has been getting a lot of feedback from attendees of the events that the sponsors' ads and signs all over the arena are distracting and too large.  This concerns the nonprofit's leadership, they decide to convene a board meeting, research options, and meet to discuss the situation and options.  If the board decides that they do not require the league to raise the money that it usually gives them, each year; and the benefit of not having to post sponsors' ads all over the area anymore is worth finding another income stream (i.e. a new fundraising event to conduct each year or expanding an existing and successful fundraising method already being conducted, annually) then they might decide not work with sponsors.  It is always worth noting a nonprofit's values and whether those are impinged upon by any of the organization's work, including its fundraising.

Sponsors, like any other donors, are valuable as once they donate, they should be cared for and retained to give again (probably for the same event), next year.  They can also be developed (like most other types of donors) to give in addition to the sponsorship, and perhaps even in larger amounts.  A strong relationship with a sponsor is equivalent to a nonprofit having a strong relationship with a major donor.  These donors are typically entities that give in larger dollar amounts and very powerful, especially in poor economies, like these.

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