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Making Sponsorship Revenue a Part of Your Nonprofit Fundraising Strategy

By Teri Bellamy

Are you limiting your nonprofit organization’s ability to meet its mission by having a narrow view of the role sponsorship revenue can play in your fundraising strategy? Nonprofits have been known to shy away from sponsorship revenue opportunities due to concerns about the misalignment of values, selling out to corporate interests or losing their message in the gaping corporate maw. Though these vulnerabilities are real, the truth is that sponsorship revenue can expand your ability to serve your mission and create a more robust fundraising strategy.

Gather your development team together to brainstorm corporations you’d like to see around the table. Your team can then reach out to potential sponsors and test the opportunity. Here are some key considerations as you begin to develop sponsorship revenue strategies:

Alignment is essential. Creating strategies around sponsor alignment can go a long way in developing mutually beneficial partnerships between organizations. Look for corporate partners that are aligned with your nonprofit’s mission. Sponsorships can absolutely be done in a way that is tasteful in order to avoid the optics that corporate partners may have influence over your mission.

Consider underwriting event costs. By underwriting the costs of events through sponsorship revenue, nonprofits can concentrate other donations received towards the general fund or other specific campaigns, such as a capital campaign. This intentional placement of funding allows participants in the event to know that their dollars will directly support the mission and activities of the nonprofit.

Tailor the sponsorship. The IRS draws a fine line between sponsorship revenue and advertising revenue. Its focus is on whether the corporate sponsor has any expectation that it will receive a “substantial return benefit” for its payment. Tailoring the sponsorship so the payments meet the IRS definition of “qualified sponsorship payments” can avoid the taxability of these payments. Always check with your tax advisor. Additional information can also be found here.

It might be time to test your strongly held assumptions about the role sponsorship revenue can play in your nonprofit. Introducing sponsorship revenue into your strategy allows your most prized assets or services to be put to work for revenue generation that will continue to support your mission.

About the author: Teri Bellamy serves as Caravel Marketing’s chief financial officer, providing the agency with financial and HR strategy and oversight. She brings high-level executive finance experience from her early career at Big Four accounting firms and more recently as the CFO for a Seattle-based health care innovator. Teri has also worked with several local nonprofits in a financial director role.