Posts Tagged ‘sponsorship’

Six myths of corporate sponsorships debunked

More and more nonprofit organizations are using corporate sponsorships to bring in additional income. And for good reason: According to IEG’s  latest annual industry forecast, spending on sponsorship by North American companies was projected to increase by 5.5 percent in 2013 and globally by 4.2 percent–the equivalent of a projected $53 billion spent by companies worldwide.

Several factors account for this strong forecast, including an increase in nontraditional sponsorship opportunities and the consistent revenue growth companies and organizations that use sponsorships have seen from year to year. Despite this explosion in sponsorships, many executive directors, development staff and well-meaning board members still have an unrealistic understanding of what corporate sponsorship is and what it takes to attract those dollars. Too many think that sponsorship fees are similar to corporate contributions, but with a few more deliverables. In fact, from the perspective of the corporate decision-maker, there are few similarities between the two.

Here are six common myths about sponsorships that may be interfering with your organization’s efforts to secure corporate funding:

1. Sponsorship sales is fundraising.

Fundraising is about making the case for philanthropic support for your mission or cause; sponsorship is about marketing. In other words, sponsorship is about a company reaching and impacting potential customers through your organization and its constituents to achieve its marketing and communications goals. If you don’t intend to provide tangible rights and benefits to a sponsor (for example, on-site exhibits, use of mailing lists or ads in your event program), don’t go after sponsorships.

2. Sponsorship fees should equal the cost or expense of the asset.

Many nonprofits set the “fee” they are seeking based upon a fundraising goal or the cost to fund a particular program. However, with sponsorships, there is no correlation between the fee and the expense of the program being sponsored. Indeed, in most cases, the sponsorship fee is worth much more than the cost of the program. Instead, the fee should be based upon the value of the sponsorship rights and benefits package.

Generally, there are two valuations that go into determining a sponsorship fee: tangible and intangible values. The tangible value includes all benefits that can be quantified (e.g., advertising, mailing lists, event tickets). The intangible value is the worth to the corporation of being associated with your organization or event (e.g., prestige of organization, media interest, networking opportunities). Together, the two determine what a sponsorship opportunity is worth.

3. Sponsors are primarily interested in exposure.

Many nonprofits assume that the difference between fundraising and sponsorship is a banner—in other words, the corporate sponsor is really just looking for recognition. While recognition may be one of their objectives, the reasons for sponsorships are far more diverse. According to a recent sponsor survey conducted by IEG, a sponsorship consulting and research firm, the most common reasons for sponsorship are that companies want to:

Have a closer, personal impact on their customers/clients, as well as the opportunity for two-way communications;

Increase visibility;

Shape attitudes;

Communicate their commitment to a particular profession or lifestyle;

Differentiate their product from the competitor’s;

Entertain clients;

Showcase product attributes;

Combat the larger ad budgets of competitors; and

Increase sales.

4. Category exclusivity is generally not that important.

The issue of category exclusivity is where many nonprofits get stuck with sponsorships. Category exclusivity is the right to be the only company within its product or service category associated with the sponsored organization. Simply stated, if Coke is a sponsor, Pepsi is not allowed to be involved.

Sponsors demand category exclusivity because they want a marketplace free from “competitor noise.” Having more than one company from the same sponsorship category will greatly diminish the value of sponsorship and decrease the attractiveness of your event to a potential corporate sponsor.

5. Gold, silver and bronze are popular sponsor levels with corporations.

Contrary to popular belief, using sponsorship levels like gold, silver and bronze do not attract big sponsorships. As soon as a corporate sponsor sees a proposal with a precious metal designation, it assumes the request is just another fundraising appeal. Instead, the terms used for true sponsorship designations are “Title,” “Presenting,” “Associate” or “Official Supplier.”

6. Sponsorship sales is a loathsome responsibility.

Few really enjoy soliciting corporate sponsorships. The main reason is because oftentimes nonprofits don’t have a clear understanding of why a company would want to sponsor their program or event, or they simply don’t have the tools to effectively represent their organization.

Sponsorship sales is not rocket science. Know what you have to offer. Identify who you think might have an interest or need in what you have. Approach them about their needs, not yours. Present a clear, concise opportunity that is appropriately valued and priced. And once they say yes, take good care of them.

See also:

Fundraising with Businesses: 40 New and Improved Ideas for Nonprofits

Cause Marketing for Nonprofits: Partner for Purpose, Passion and Profits

Leveraging Good Will

Image credits: libn.com, athletichic.com, bitrebels.com, gbfb.org

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Raise more by selling your impact

I was excited to read Jason Saul’s new book, The End of Fundraising, because a friend of mine who is the president of a local bilingual school recently heard Saul speak at a conference and found his approach to fundraising very compelling. As chief fundraiser for an organization whose prospects pass through a revolving door because their children eventually graduate, my friend is especially keen to learn about how to engage community stakeholders who find value in what his school is doing. I’m happy to report to you and my friend that Saul’s book presented terrific strategies that are grounded in years of first-hand experience.

The End of Fundraising, is based on his epiphany that we are trying to convince the wrong people to support our organizations. In other words, you can only leverage funding from funders who value what you have to offer. While acknowledging that the emotive or passionate donors will always be part of the constituency mix, you must also consider the people who truly value your work and who economically benefit from the social outcomes you produce. If this were the basis for more donor relationships, Saul argues that we wouldn’t have to beg for contributions. Rather, we would sell our impact and leverage rational decision makers. What’s more, evidence abounds in our communities in support of the real economic currency our nonprofit outcomes produce in every major cause within the sector. Be it education, health care, global development and even the arts, we have yet to embrace the market to its fullest potential despite the fact that the market has embraced our work.

To effectively raise funds in today’s economy, you must transact your social impact rather than dance around the edges with quasi-market behavior. Saul says we don’t need a parallel economy for the independent sector; we need to find a better way to play within the perfectly good one we have. This book will teach you to understand the role of social change in our economy; learn how to engage stakeholders; define your impact by outcomes, not activities; determine which stakeholders value your outcomes the most; translate your work into high-value outcomes; create powerful value propositions to increase your leverage; and improve the success of your pitches to funders.

When I asked Jason how smaller nonprofits that might not be able to produce these high-value outcomes benefit from this End of Fundraising approach, he said, “Selling your impact is completely viable for both small and large nonprofits. In fact, many smaller nonprofits (charter schools and social entrepreneurs) are using innovative strategies to produce extremely high value outcomes. However, there are many nonprofits, small and large, focused on a single activity or a fragment of an outcome, such as providing a free meal or a suit for a job interview. These organizations can increase their value in the social capital market, but they will need to reach for higher value outcomes by extending their services or partnering with others.”

Have you experimented with selling your impact? Let us know about it. The first three responses via this blog or to Mail@CausePlanet.org get a free Page to Practice executive book summary of The End of Fundraising.

Jason Saul’s book will help you:

    Define your impact by outcomes, not activities, and learn how to engage stakeholders.

    Translate your work into high value outcomes and determine which stakeholders value your outcomes the most.

    Understand the role of social change in our economy.

    For more information about selling your impact, purchase this book at JosseyBass.com, visit Jason Saul’s website at www.MissionMeasurement.com or visit our Page to Practice library for a complete summary including our interview with the author.

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