Corporate Sponsorship

Becoming a Corporate Sponsor

Sponsoring a nonprofit is a terrific way for a business to support a nonprofit's mission and for a nonprofit to realize revenue to help move that mission forward. By partnering with a nonprofit and making a financial contribution that is visible, the business can elevate its own credibility through public recognition of its support of the nonprofit. Businesses can become known for being "good corporate citizens" by partnering with a nonprofit. But nonprofits need to recognize that in order to attract a corporate sponsor, the nonprofit needs to offer that business an attractive return for its investment, such as exposure to, contact with, and heightened recognition among the nonprofit's stakeholders, other donors, and the public.

Caution: Nonprofits that engage in any partnership -- whether with a for-profit or another nonprofit -- must be careful because their own image can be tarnished by relationships with their partners. Before entering any partnership nonprofits should ask, "Is there alignment between mission and the business partner's products or persona?" It probably doesn't make sense for a nonprofit that fights childhood obesity to partner with a sugary snack manufacturer as a corporate sponsor. It is important to stay mission-driven and not partner just because of a promised contribution, without thinking about the intangibles of the partnership relationship. While a nonprofit can't predict whether a corporate partner will become a liability down the road, there is much that a prudent nonprofit can do when exploring corporate partnerships to boost the probability of success in the relationship.

Is the Revenue from Corporate Sponsorships Taxable?

The National Council of Nonprofits encourages nonprofits seeking corporate sponsorships to recognize the difference between a charitable contribution provided to the nonprofit by a business, and payments made by that business to enhance its own marketing presence (in essence, advertising expenses). Sometimes corporate sponsorships are a way that businesses pay for advertising. Other times their payments to a nonprofit are simply support for the nonprofit's mission -- like any other charitable contribution. When nonprofits partner with businesses for fundraising activities, the nonprofit needs to be aware that some or all of the income earned by the nonprofit will be considered income in return for advertising, which is taxable as "unrelated business income." Being aware of the distinction between advertising income and a contribution can help a nonprofit structure the sponsorship in the most beneficial manner and also ensure that the nonprofit correctly accounts for the revenue received.

Learn more about corporate sponsorships from the National Council’s Toolkit on Corporate Sponsorship.