Do you know the difference between sponsorship and philanthropy? Reality check—yes, there is a difference—and it is probably bigger than you think!
Each day, we work with many organizations providing sponsorship marketing consulting services. In any given year, over the past 18+ years of business, we work with 30-45 different clients. Some ore philanthropic charities seeking to learn better the difference between sponsorship and philanthropy and generate more true sponsorship revenue. Some are non-profit organizations such as amateur sport organizations, arts groups, member associations, fairs and festivals, and such. They too are looking to generate more sponsorship revenue and have to figure out “who they are” and how to raise money other than “begging to help them out to survive.” And of course, we work with for-profit sponsorship properties selling professional sports or for-profit events, conferences, and such, who are also looking to raise revenue through sponsorships. And finally, we work with companies/brands/sponsors which are spending money with these other groups (charities, non-profits, pro sports, etc.) to market themselves better and generate positive ROI on their investment. And I can tell you, most, not all, but most really don’t have a clue about the difference between sponsorship and philanthropy.
By attending events and professional development opportunities like the WSC Ontario – Toronto Forum which is tomorrow or the WSC Alberta Forum in Edmonton in December, you can learn a ton more about sponsorship and philanthropy—how they differ, how they are similar, and how they can work together to maximize your ROI!
But for the sake of this TMC, let me quickly identify each of these from a revenue perspective. Note that they are different, but often work in tandem in organizations that deliver both charitable tax receipts and sponsorship marketing opportunities.
Philanthropy or Donation: This is when a company or an individual (more often than not an individual, because a donation from a company is not as financially beneficial to it as a sponsorship for the same dollar contribution) gives altruistically to an organization. It cares about their mission, it believes in what they are doing, and truly wants to make a difference in the societal outcome of that organization’s mission. In return, they get nothing more than a tax receipt—no banners, tickets, or sampling opportunities. They get a charitable tax receipt and a thank you! The Canada Revenue Agency (CRA) says a gift or donation is made when the donor gets nothing in return other than a charitable tax receipt. So, if you are a company making a contribution to a charity and get absolutely nothing of tangible value in return (no ad in the paper, full-page article in the annual report, banner, speaking opportunity, name on the building, “presented by,” employee engagement, etc.), then you are making a philanthropic contribution. Remember, you get NOTHING in return. (For individuals, this is fine—CRA says individuals have nothing to gain in having their name associated with an event, property, or building.)
Sponsorship: This is when a company provides cash, or in-kind products or services (don’t get me going down the in-kind topic—a whole separate TMC) in exchange for exposure, alignment, association, or marketing opportunities associated with the property (be that a pro sports team, non-profit, or charity). It is a business transaction. Like buying newspaper space, the company provides the newspaper with money, gets an ad, and delivers its message to the audience that the newspaper delivers. Likewise, with a sponsorship, the company provides the sponsorship property rights holder with money and gets exposure to that audience. The key in the difference between sponsorship and advertising (again another TMC) is that the ad pushes out a message, the sponsorship engages with an audience through experience and interaction. If your sponsorship is just naming a building or hanging a banner, it is a waste of money. You want to engage and interact with the audience you are reaching and enhance their experience. Through making the experience better, the brand/sponsor will build goodwill (and sales opportunities) with that audience.
There is more to it than this, but that is the basic difference. For more detailed understanding, and training of staff and boards on sponsorship and philanthropy, please reach out and let’s chat!
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