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What Is the Difference Between Sponsorship and a Donation?

As a nonprofit organization, getting cash, goods, and services from the local community is a great way to keep your organization afloat with a never ending flow of support. Yet, there’s a lot of confusion surrounding the ideas of sponsorships and donations. In fact, many people use these two terms interchangeably, though they’re two entirely different concepts.

Sponsorships and donations can be cash or in-kind (goods and services). But, there’s a big difference. Sponsorships are more of a marketing tactic, putting a company’s name on an event or ad to boost revenue. Donations are charitable in nature and purely benefit the organization at hand.

You might be contemplating whether you’re looking for sponsorships, donations, or both. So, let’s go over the major differences between sponsorships and donations and the different types of each.

Sponsorships

When a company pursues a sponsorship, both your organization and the company contributing will see benefits

As an organization being sponsored, you’ll either receive money, goods, or services as the cost of outside businesses. On the other side, the company will gain recognition and perhaps publicity as a result of the sponsorship. 

In a way, sponsorships put a business’s name on an event or a charity, which can help the company to bring in greater revenue and sales. This can also make the business appear more giving and charitable.

So, since sponsorships are more of a give-take relationship and benefit the company, they’re usually much easier to lock down than donations.

Types of Sponsorships

When you’re looking for a cash sponsor, you’ll be receiving money in support of an event, individual, business, or charity. In return, the company sponsoring your organization will be given public recognition for the money it donated. This is the easiest type of donation and is ideal if your organization needs some money more than goods or services.

Yet, a company doesn’t have to just donate money to become a sponsor. 

As an in-kind sponsor, a company or business can donate services and/or goods to your organization instead of cash, still receiving recognition. This is a great idea if your organization desperately needs services and goods and the businesses in the community have a lot of manpower.

Here’s a look at what an in-kind sponsorship might get your organization.

  • Free or discounted meals or catering
  • Free or discounted airline seats, hotel rooms, or travel expenses
  • Free vehicle giveaways
  • Discounted services from a business

Remember, what makes it a sponsorship is a recognition of the donation. 

So, a company that provides any of the donations above could be recognized by your organization by having their name on a flyer or banner, on the back of a T-shirt or other clothing, or on a televised or social media advertisement. 

Why Sponsorship?

Even though sponsorships help your organization, they also pose quite a few benefits for the company sponsoring as well. This generally looks a lot more appealing to businesses looking to boost revenue. Here’s why sponsorships are so easy to obtain (plus, a brief look at the other benefits of sponsorship).

For most sponsorships, the motive is exposure.

Let’s say your organization receives a $10,000 donation for your organization’s annual charity ball from a local area business. You can discuss with the company how they’d like to be recognized for their good deed. Their donation might get their name on the banner out front of the ball. This also gives the company publicity, which can help to drive more local traffic to their social media accounts or website. 

In some instances, companies don’t spend anything on sponsorship.

Let’s say your organization is running a local 5K and is looking for sponsorship to cover the costs of the event. A local sports apparel business notices this scheduled event and offers to donate some sports apparel or T-shirts to the runners. This gives your organization the ability to provide a shirt to each and every runner that signed up while also giving the donating company the chance to get their name printed on the T-shirt of each runner.

Sponsorships can reduce a loss in profits.

Let’s say you run a homeless shelter where food insecurity is a common problem. A local bakery comes to you and tells you that they don’t sell out of their baked goods, sending a ton of food to waste each week. In exchange for receiving their extra food at the end of the week, you can agree to put this business’s name on your shelter’s brochure, thanking them for their donation and giving them publicity in the process.

Donations (or Corporate Philanthropy)

Just like sponsorships, a donation will require a company to give money, services, or goods to your organization.

Yet, the recognition received will be done privately. That means the donations are handed out purely for the greater good of the community without providing public recognition being a term in the agreement.

Donations give a company the chance to become a pillar in the community. This allows them to gain a little insight into the community’s needs, build connections with community members, and feel good about giving back.

Since most companies have a goal in corporate philanthropy, they’re looking to get involved in any way possible. But, these might be harder to obtain since most companies are also looking for recognition for their donations.

Types of Donations

Just like sponsorships, donations can be either cash or in-kind (services or goods). 

The difference between sponsorship and a donation is the amount of control your organization has over how the services, goods, and money are being used. So, instead of promising recognition for the donation, your organization is in charge.

Ultimately, your organization has the authority to choose how the money is spent or how the goods are used. If your organization has built up a great reputation, companies shouldn’t be nervous about donating to your cause.

Here’s a list of events that might trigger donations from outside companies.

  • Relief from a natural disaster (storm, hurricane, tornado, flooding, etc.)
  • Feeding or providing shelter to those less fortunate
  • Getting extra inventory off their hands and in the hands of those who need it
  • To feel like they’re playing a role in the community

Why Donation?

When a company is a pillar in the local community, they begin to build a relationship with the members of the community. In the process, they can build a deep personal connection and help those less fortunate. On your side, this is a no-strings attached relationship with a local business. Here’s why a company might donate to your organization rather than pursue a sponsorship.

With a donation, they can help the local community.

Let’s say a hurricane or tornado runs through your local community and does severe damage to the local homes. Your organization is looking to help those impacted by this disaster and a local supermarket owner has a decent stock of extra canned goods and bottled water. This company might want to simply donate these goods to your organization to help out those in need.

Donations are a great way to put employees to good use.

Let’s say you run an after-school program in a low-income community. A local company has a large staff of college-educated employees looking to give back to the community. When you put your organization on the map, you can recruit these skilled employees to your organization to provide help to children needing tutoring.

Conclusion

Both sponsorships and donations will help your organization. Here’s a look at the key differences between these two terms.

  • Sponsorships help both your organization and the company donating, giving them public recognition for what they’ve donated to your organization.
  • Donations purely help your business, but might be a little more difficult to lock down since a lot of companies want some recognition for what they’ve given.

Either way, both sponsorships and donations will help your organization. Donations are ideal, however, if you’re looking for a bit more control over what you do with your donations. 

ABOUT THE AUTHOR

Chris Baylis is the President and CEO of The Sponsorship Collective and a self-confessed sponsorship geek.

After several years as a sponsor (that’s right, the one investing the money!) Chris decided to cross over to the sponsorship sales side where he has personally closed tens of millions of dollars in sponsorship deals. Chris has been on the front lines of multi-million dollar sponsorship agreements and has built and coached teams to do the same.

Chris now spends his time working with clients to value their assets and build strategies that drive sales. An accomplished speaker and international consultant, Chris has helped his clients raise millions in sponsorship dollars.

Connect with Chris via: The Sponsorship Collective | Twitter | LinkedIn