Sponsorship or partnership? Which is best?
Heather Newell, FFINZ, CFRE
NewzViewz, Issue #100
Everyone wants a corporate relationship. Your Board thinks it is a good idea, your Chief Executive thinks itwill solve your fundraising issues and, of course, your supporters and members think it will allow you to achieve your mission. True or false?
Let's start with the positive - and let's keep it short. It's true that a corporate relationship could help you to achieve your mission. But, let's be clear, there is virtually no chance that a corporate relationship will solve your fundraising problems. It will not create sustainability in the long run. It will not provide the untagged cash that you are hoping for and it will certainly cost you money to provide the resourcing required to service your corporate partner/sponsor.
One final significant negative is that whilst you are researching, prospecting, and building relationships with potential partners (which will take significant time), you will be distracted from your most important job: building sustainable relationships with your supporters!
If your Board does not see the logic in this, then direct them to the Philanthropy New Zealand Report on Philanthropic Giving which suggests that your income from the corporate sector will be well under ten percent.
When I first started in fundraising in 1992, corporate sponsorships were my area of expertise. I had been a corporate sponsorship manager in my past life and I was keen to share my knowledge. For over 13 years I produced a subscriber publication on the topic of corporate-charity relationships and even produced a book called The Beginners Guide to Sponsorship. I attended annual sponsorship conferences in Australia and was an active New Zealand representative on the Australasian Sponsorship Marketing Association. But in the intervening years, things have changed.
Firstly, the government liberalised tax rules around corporate and individual donations to charity. This meant that corporates and small businesses could give money to charities in any form they liked. There was no longer any tax requirement for a charity to return promotional benefits to the corporate partner.
Secondly, many large corporates used their community relationships to deter government (national and local) intrusion into their business. Telecom, for example, spent $22m per annum on community relationships is an attempt to persuade government not to regulate their business activities. It didn't work! As we know there was government intrusion into their business and regulations were passed which resulted in the breakup of Telecom's business into smaller competing parts.
Finally, the Global Financial Crisis resulted in many large businesses reviewing their budgets and spending.
Companies which once would have been big players in the community sector have all but disappeared or have been restructured. Telecom, NZ Post, the big State Owned Enterprises (SOE's) are some examples here. So hat are we left with?
Sponsorships in the true sense of the word are now mostly reserved for high profile sporting events or activities which have the potential for huge public engagement.
In a sponsorship, obligations are clearly spelt out. The charity is delivering something to the corporate; usually some kind fo name recognition and publicity and promotion. In effect the corporate entity will pay either in cash or in kind for the service. And because there is an exchange, GST is required.
A partnership, on the other hand, involves two parties working together to resolve a community issue or problem. Money may not change hands. There are possibly no GST implications. The public may not be aware of the relationship. Both parties must actively engage in the delivery of outcomes and this may require your charitable organisation to invest resources and budget to deliver on the outcomes required by the corporate.
From a charity perspective, and as fundraisers, you need to ask yourself, what do we want out of the relationship? If it is untagged funds, then you need to find a sponsor but if your objective is to resolve a problem then a partnership is the best model.
Partnerships must be carefully considered. They must be resourced. Although there are some similarities this kind of relationship is not the same as that provided by a philanthropic funder. You need to have people who understand the corporate needs, you need communication and marketing expertise and you need to have your own audience of people who will recognise and celebrate the value of the corporate's input. No criticism allowed!
If your organisation can leverage a corporate relationship there can be a whole lot of other advantages and benefits that come with it, such as staff engagement, expertise, introductions, networking, and fundraising involvement.
Think carefully about what it is your charity is trying to achieve and pitch it right and you may secure a long term workable relationship. But please don't presume that a corporate relationship is going to solve your fundraising needs and certainly don't put all your eggs into this one basket.