Nonprofits have to think creatively to raise funds to allow their organization to exist, survive and provide their services to the population. Through various forms of sponsorships, nonprofits receive a great source of revenue as well as public relations and marketing possibilities that can increase their visibility. In turn, the added revenue and exposure allows nonprofits to gain even more resources to further their mission.
A corporate sponsorship occurs when a company or business from the for-profit sector supports the nonprofit’s activities, programs or special event through a donation. This type of sponsorship offers opportunities for a nonprofit to partner with a corporation that has greater financial resources at its disposal to allow for both a substantial revenue source and increased marketing opportunities. A corporation that associates itself with a nonprofit through sponsorship might also choose to give its support through non-financial means and make donations in kind. For example, a footwear company may get associated with a local community sports organization and give its participants a new pair of running shoes.
Fiscal sponsorship happens when an organization that is not tax-exempt is sponsored by another organization that is tax-exempt to benefit from its legal status. In this relationship, a fee-based contract is often put in place. The fiscal sponsor handles administrative responsibilities of getting and administrating charitable donations on behalf of the sponsored nonprofit. The nonprofit benefits from this arrangement because the donations become tax-exempt and allows donors to receive a deduction for their contribution.
Cause marketing is closely related to corporate sponsorship because it refers to the association of a for-profit business with a nonprofit, but it differs because it is not based on a donation. Instead, the for-profit organization partners with the nonprofit to offer marketing services. Examples of cause marketing include promotion, product licensing, endorsement, certification and employee service programs.
Although fundraising usually refers to efforts made by a nonprofit to increase its revenue through solicitation for donations, the same technique can be used to gain sponsorship. In this case, a nonprofit would first identify potential investors and businesses would have the capacity to become a sponsor. Then, instead of a request for a single donation, the nonprofit can approach the interested parties to inquire about a possible partnership through corporate sponsorship, financial sponsorship or cause marketing.