How to Make Corporate Sponsorships Work for You
by Jim D. Rebenar, Audit Manager
Posted on August 9, 2017
Has your nonprofit organization ever tried to organize an activity or special event, only to realize that you lacked the necessary funding to support it? Did you consider partnering with a local business as an option to cover the expense?
Corporate sponsorships offer a great opportunity for nonprofits to raise financial support from a source they might not usually consider. For private companies, the attraction of a corporate sponsorship is the public recognition when supporting a charitable cause. The media attention that corporate sponsorships attract may not only bolster the sponsoring company’s reputation, but it can also generate public awareness for your own nonprofit organization and its mission.
So what steps should you take when approaching a corporate sponsor? Start by doing your research to identify companies that would be a good fit. Look for businesses with a strong presence in your community who are likely to have an interest in your cause. If possible, use contacts with whom you may already have a relationship. Board members often have ties to the business community so be sure to get them involved.
Once you have targeted potential sponsors, the next step is to prepare your sponsorship plan. This step may require the most effort, as you will want to develop a comprehensive plan which addresses all aspects of the sponsorship. Your plan should include detailed information about the event, the different levels of sponsorships available, and what benefits are included with each level. When defining the sponsor benefits to be offered, be sure to carefully review the IRS’s guidance over qualified sponsorship payments (see HERE). Benefits that are more than insubstantial or go beyond a simple acknowledgment may not qualify as tax exempt sponsorship payments. Examples of such benefits include:
- Advertising
- Providing goods or services of more than an insubstantial value
- Granting the sponsor the rights to your organization’s name, logo, or trademark
- Designating the sponsor as an exclusive provider for the event
- Allowing sponsorship payments to be contingent upon the level of attendance
Contact your prospective sponsor and present your plan in a way that allows them to see how their sponsorship will benefit both entities. Remember to remain flexible so that you can tailor the plan to help your sponsor meet their goals. Once you have a sponsor on board, the best way to ensure that both parties’ expectations, obligations and deliverables are met is through documentation in a written sponsorship agreement.
Finally, make the best possible effort to ensure that the sponsor is willing to support future events. Deliver on your commitments and follow up by reaching out to show your appreciation. Make sure they know how important their contribution was. A renewal sponsorship will only make things that much easier for your next event!
