By Rickesh Lakhani, CFRE
Every organization needs funding to thrive. You need resources to invest in your programs, your members, your staff, and your infrastructure – to ultimately achieve your greater mission. You likely have value that you can offer in various ways to obtain this support. So how do you know which is the right way to do this?
Two major sources of funding are fundraising and sponsorship – it is a common mistake to confuse these two, and an even bigger challenge when they are treated the same. While they do have the same goal of drawing in resources through mutual gain, they have some fundamental differences that need to be understood to be effective as tools in your resource-building toolbox. There are also similarities that need to be considered so that you do not lose sight of them.
For the purposes of this article, fundraising includes grants, donations and events, and sponsorship includes providing marketing value. We will also focus more on bringing in funds from organizations and corporations rather than individuals. Let’s compare the two from a variety of lenses.
Motivation and objectives
Donors giving through fundraising efforts want to help you serve your clients. Sponsors want you to help them reach your audience. With fundraising, it is the vision of the organization, the programs, and the stories of impact and outcomes that are the primary drivers. In sponsorship, the motivating factors are the vision for the event or opportunity, the testimonials of past sponsors and the marketing outcomes achieved.
To understand motivations and goals, you must investigate through exploratory conversations, curious questions and research. You also want to ensure you understand and can articulate who your audience and clients are. Once you understand what an organization is looking for, you are better able
to propose what you can offer. Sometimes there is a fundraising opportunity, sometimes a sponsorship opportunity, and it could even be both.
Sponsorship is typically about providing marketing value. It’s more of a transaction where you are seeking to provide marketing, promotional or reputation enhancing opportunities that will build positive affinity towards the sponsor’s brand and products. Fundraising is about providing social value. A donation is intended to create positive community change and the value gained is at more of a societal level. Although, for a corporation, being connected to a social cause can also be a source of positive affinity.
For sponsors, they are interested in the number of people reached, chances for activating new customers, marketing impressions and brand affinity created. For donors, they are interested in the number of people helped and the impact on communities and the world.
Whether you are seeking donors or sponsors, there should always be alignment. For donors, you want to find those that align with similar values and believe in what you are doing enough to invest in it. For sponsors, you want to find those who align with your audiences and see enough value there to provide value of their own.
There may be situations where the alignment could actually be negative, or at least perceived as negative, such as an energy drink company sponsoring an event for children or a water bottle company donating to a pro-environment charity. You have to decide if the value exchange aligns for both sides.
Depending on the size of the organization you are looking to work with, you might be dealing with different departments for fundraising or sponsorship, or it might be the same. Fundraising might come from “Community Relations”, “Community Investment”, or a company’s charitable foundation arm. Sponsorship might come from “Marketing”, “Public Affairs” or “Public Relations”. In smaller organizations, donations and sponsorship decisions might be made by the same people or department.
Either way, you are building relationships where, over time, you create goodwill and trust – no matter what, you are dealing with people. You have to get them excited about what you can offer. You also want to follow up down the road with proof of impact to increase likelihood of future support. Regardless of how you are working with an organization, staying in touch and reinforcing the value of the relationship is crucial.
Sometimes you can even do both fundraising and sponsorship with one organization, as it often comes from different budgets – you just have to know what they are looking for and where the decisions are being made.
To help determine where you can gather more support, ask yourself questions such as:
- How can others invest in your cause or have access to your audience?
- What marketing value or social value can you provide?
- Who aligns with your values or your audience?
- What are the key relationships you need to build on and where are the decisions being made?
If you can understand the main differences, and similarities, between sponsorship and fundraising, and how you can determine which one your potential partner might be looking for to achieve their goals, you are well on your way to building a strong pipeline of funds that will allow you to achieve your mission for years to come – while also helping to achieve the goals of others.
Rickesh Lakhani, CFRE is Executive Director, Future Possibilities for Kids, Trillium Charity of Choice.