The difference between Sponsorship and Philanthropy

The difference between Sponsorship and Philanthropy

To this day, I remain confused as to why major companies continue to confuse sponsorship and philanthropic activities, or to treat them as similar in terms of their value.

Philanthropy is a donation to a cause that the company believes in. In general it is done as a sign of good will, and by the very definition of the act, it is done without any expectation of return.

Sponsorship on the other hand is a transaction that is not unlike a media buy. It is a transaction that involves an expectation of return. The company buys a sponsorship position in a project or event in return for a variety of very specific business-related reasons:

  • Appropriate target audience
  • Good fit between event and business
  • Good sampling opportunities
  • Good third party exposure through event
  • Effective peripheral events built specifically for the sponsor
  • Unique client hosting ideas
  • Creative ways to tie the event to the business at POS
  • Significant media coverage
  • Direct product use at event (sales)
  • Direct product use at event (endorsement)

While both actions (Sponsorship and Philanthropy) usually involve the provision of funds (or products) by the company to the event/property, only the sponsorship support involves a contract that can and should require a return on the investment.

Sponsor agencies, large and small, have been preaching this philosophy for decades. In the 90’s, I used to regularly attend the International Events Group’s ”Sponsorship Marketing Conference” in Chicago, and the mantra was always the same – Sponsor ROI.

Yet here we are in 2015 and many businesses are still operating like sponsorship is merely a donation to a cause.

While I recognize that the sponsorship decision in many companies may indeed be a show of corporate support for the chosen cause, the expectation can and should be significantly different.

Many event property owners offer little more than signage/logo opportunities in return for a company’s support. At the same time, many companies do not demand more, choosing to get involved in the project without negotiating a heightened level of return from the event operator.

There are a number of reasons why this happens:

  • Inexperienced sponsor sales people do not understand how to custom package their events to help companies meet their marketing objectives;
  • Companies may not have the expertise in-house to visualize how to turn the sponsorship into part of their overall marketing campaign;
  • Event properties don’t want to offer more – because providing true sponsorship marketing programs is a lot more work than putting a sponsor’s sign up on-site or adding their name to an ad in the program (both options have little or no value in the real world unless it is a massive event);
  • Companies may also want to avoid doing more – thinking that if they give the money the charity will “go away” and not bother them. In the same vein, they realize that the cost to leverage an event can sometimes run as high as double the cost they paid to sponsor that event.
  • In reality, some companies may just not care. They treat their sponsorship as a donation to that cause and as a result, they should really be paying for the activity out of their philanthropic budget (some companies have merged their sponsor and donation budgets for that very reason).

This is truly a lost opportunity, because studies have proven that sponsorship marketing can be a very effective part of a company’s marketing strategy – as long as the sponsorship is aligned directly with corporate marketing objectives.

As such, companies should demand more from their sponsor activities.