How to Distinguish Corporate Sponsorship from Advertising
Savvy arts entrepreneurs chase any and every funding opportunity under the sun. If this describes you, you’ve already got a robust plan to solicit individual giving and know which foundations best aligned with your work. So you’re probably also eyeing that yummy, yet problematic, buffet of corporate cash.
Before you try to fill your tray with these dollars, it’s important for you to know the distinction between corporate sponsorship and advertising. Any support that you receive from a corporate funder will fall into one of these two categories.
Corporate sponsorship is a form of contributed income that the IRS would recognize as a charitable donation. As with donations from individuals, corporate sponsors would not see a substantial benefit in exchange for their support. Rather, they are just donating out of the kindness of their corporate hearts. Likely, a corporate sponsor considers you a partner in achieving a shared vision in your community and will want to engage in a relationship with the work that you do.
Advertising is a form of earned revenue, just like ticket or merchandise sales. Advertisers receive a significant benefit in exchange for their payment. A company that wants to advertise with you probably doesn’t consider you to be a partner, but a service provider — you’re giving them a marketing opportunity. The relationship between you and the advertiser is probably purely transactional.
Two Clarifying Questions:
There’s a lot of murkiness as to what types of support would fall into which category. Here are two questions that should help you figure it out.
What benefit is being offered?
Corporate sponsors give you WAY MORE than they get back. Here are some examples of insubstantial benefits that could be conferred to a corporate sponsor:
- Name and logo placement in your marketing materials
- Tickets to your event (be aware of partial deductibility)
- Token thank you gifts like t-shirts or baseball caps (ditto partial deductibility)
- Volunteer opportunities for the company’s employees
Advertisers expect to receive something commensurate to what they paid. Here are some examples of what would qualify as an advertising opportunity:
- More than just name and logo placement — they want to put a qualitative message in your program (“Our restaurant is the best!”)
- Product placement in your film or a place for them to distribute literature about their company at your event
- An exclusive provider relationship where you offer their products only
Who’s in charge?
It’s important that the terms of your relationship be defined at the outset. Who calls the shots?
A corporate sponsor defers to your judgment as to how their name and logo should be used. You can offer certain levels of logo placement. (For example: Platinum Sponsors get Above-the-Title Billing, Gold Sponsors get Front Page Billing, and Silver Sponsors’ logos will be places on the back.) The important thing here is that YOU control the content.
With an ad, you’re ceding control of the content to a company that’s purchasing space for them to craft their own message. (For example: $25 for a quarter page in our program, $50 for a half page, $100 for a full page.)
Two Questions for Further Reflection:
Hopefully the above helps clear up any confusion between a corporate sponsor and an advertiser. But before you seek to enter into relationships with these funders, there are two more questions to ask yourself.
How do I know that I’m truly right for this opportunity?
Corporate funding can be just as scarce as foundation support. It’s not always worth your time and effort to pursue sponsorship for which you’re not a perfect fit. The application process is a great chance for you to determine how much trouble the opportunity will be worth.
For example, I used an example earlier in this article about a sponsor’s employees volunteering for your work. It’s actually a common question in corporate sponsorship applications to ask “What volunteer opportunities can you offer to our workers?” A good rule of thumb for any application (including grants) is that if they ask about it then they care about it. So if your only answer to this question is “None,” it’s possible that you’re not going to be a competitive candidate for this funder.
But that doesn’t mean that you should invent a volunteer program out of the blue so that you can answer this question. What happens if, heaven forbid, they end up funding you? Do you have the capacity to manage a team of well-meaning-yet-untrained volunteers while also running your program?
I also encourage you to think honestly about the size of your reach. Sure, benevolent corporate sponsors want to support charities. But one motivation for doing so is that they can look like good, responsible neighbors to as large an audience as possible. Big companies will want you to have a big reach.
Do I want to be affiliated with this brand?
Money is power. Power is politics. Corporate sponsors and advertisers almost certainly dip their toes in lots of different ponds. How would you feel if one of your funders also gave to an organization whose politics are the opposite of yours? What candidates have the company or its owners supported? Do some quick research before you link arms with a partner. The money might be more trouble than it’s worth.
If you’re using Fractured Atlas as a fiscal sponsor, keep the distinction between corporate sponsorship and advertising in mind. We can only help you obtain corporate sponsorship; advertising income must be made payable to you directly. As intriguing as corporate cash might be, a strategy for soliciting and leveraging corporate support probably involves more mindfulness than finding individual donors or foundation support. Ask yourself the above four questions and you’ll be doing the critical thinking necessary to responsibly solicit and enter into relationships with corporate funders, whose dollars can go a long way toward achieving your goals.
About Nathan Zebedeo
Nathan Zebedeo is a graduate of NYU’s Tisch School of the Arts. In 2011, Nathan made the leap from card-carrying member of Fractured Atlas to an associate on our programs team, which he now co-manages. Prior to joining Fractured Atlas, Nathan helped produce celebrity author events at Barnes & Noble’s flagship Union Square location. Outside of work, Nathan directs the occasional play. He enjoys board games, learning languages, and travel.