Corporate Sponsorship Toolkit

What is a "Corporate Sponsorship"?

A corporate sponsorship is the financial payment by a business to a nonprofit to further the nonprofit’s mission, with an acknowledgment that the business has supported the nonprofit's activities, programs, or special event.

Nonprofits should consider these "readiness" factors before engaging in a corporate sponsorship relationship. Have you:

1. Identified the value proposition that will attract a business to sponsor your nonprofit's mission or special event? (what will meet the business needs of the sponsor?);
2. Defined what "success will look like" for the nonprofit?;
3. Documented the expectations for deliverables in writing? (Most successful sponsorships are based on a written sponsorship agreement); and
4. Determined the accounting and tax implications of the transaction with the sponsor and structured the sponsorship accordingly?

The resources below and linked from this page can help you distinguish between non-taxable charitable contributions by a business to a nonprofit and payments by a business to the nonprofit for advertising promotions (that will result in taxable income to the nonprofit). Accepting corporate sponsorship dollars requires finding a balance between protecting the charitable organization's interests and providing enough "return on investment" for the business, so that the relationship is a positive one for both parties.

Know the tax implications of the sponsorship. In order to receive non-taxable income, the contribution must meet the IRS definition of a "qualified sponsorship payment." Read about the tax treatment of sponsorship income.

• Learn more in this Lawforchange.org article by Carter Ellis, Esq. “Corporate Sponsorship or Taxable Advertising?”
• Resources from ASAE that explain qualified sponsorship payments.
  
• Learn about ways that a nonprofit can acknowledge ("thank") a corporate sponsor without the acknowledgment resulting in advertising income that is taxable to the nonprofit.

What would attract a business to sponsor your nonprofit?

Perhaps it's a special opportunity for access or information, such as attending a pre-special event tour of the nonprofit's facility. Make sure you are ready to attract and engage corporate sponsors: About.com offers helpful tips for successful relationships. For most sponsorships it's all about acknowledging the corporate sponsor in a prominant way. (Remember: Try to create acknowledgments that are distinct from advertising. The latter will result in unrelated business income for the nonprofit.)

What assets does your nonprofit have that might interest a corporate sponsor?

Read Gail Bower's checklist for success with corporate sponsorships to help you identify ways that your nonprofit can interest a business in gaining exposure with your stakeholders. How can a nonprofit find an appropriate corporate sponsor? "SponsorPark," is a service that matches nonprofits with corporations that are seeking nonprofits to sponsor. Some nonprofits hire a consultant to assist them identify and attract corporate sponsors.

Additional Resources

• IEG is a private consulting group that is an authority on corporate sponsorships. The IEG website offers many resources, examples of corporate sponsorships and ideas for potential sponsorship relationships.
• Consultant and author Gail Bower has written a helpful booklet, How to Jump-start Your Sponsorship Strategy in Tough Times.
• Tips on How to Get Sponsors for Your Event from About.com.