How do Sponsorships & Donations Differ?

Man and woman standing side-by-side looking curious with one hand on their chins Per capita, Americans give more to charity than any other country in the world, and the majority of these donations are from individuals. Whether it’s time, talent or treasure, there are so many different ways to give, and that can bring up a lot of questions!

For instance, what’s the difference between sponsorships and donations when it comes to charitable giving? Here’s the answer and what it might mean to you and the organizations you promote or support.

Sponsorships

Sponsorships are a kind of charitable giving where something is expected in exchange for money, items, or services. There is reciprocity involved, and in many cases, this makes for a great win-win for both the sponsoring party and the recipient.

The sponsor of an event is generally exchanging their cash, products, or services for publicity, so in a sense, it’s a type of benevolent advertising. Usually, when a business or organization sponsors an event, program, venue, or something similar, the recipient of the sponsorship will promote them vigorously as the sponsor. Fliers, social media mentions, their logo on everything, call-outs on the radio, ads on TV, and streaming services, the promotion is usually really aggressive and obvious.

Businesses and organizations can choose to sponsor events and causes strategically or choose options that are in alignment with their ideals or something that is near and dear to their organizational founder or company culture. There is a lot of flexibility when it comes to sponsorships, and non-profits organizations usually are well versed and have a robust list of sponsorship options available to support their mission and programs.

Things to keep in mind for sponsorships

There are some things to keep in mind if you are considering sponsorship, in order to ensure that both you and the organization that you’re sponsoring get the most benefit from the arrangement.

  • Choose a goal. Is the sponsorship strategic (marketing, awareness, publicity, public perception), or is it simply something that your business or organization wants to support?
  • Understand the tax benefits. Sponsorships, since there is an expectation of reciprocity (you get something in exchange for the sponsorship), are not tax-deductible (unless you do not receive anything in return for the sponsorship).
  • Sponsorships don’t necessarily have to support a cause. There are sponsorship opportunities like concerts or sporting events that don’t necessarily support a cause but can still provide the community and your business or organization with exposure and publicity.

Donations

Donations can come in the form of cash, products, or even services. When you donate money, items, or services to an organization, they are able to use it to support their goals in a myriad of ways, including things like rent, utilities, payroll, and program needs.

The donating business or organization expects nothing in exchange for their donation, and the giving is usually done in private or quietly. While the receiving organization may thank those who donate publicly, it’s usually not expected or an important transaction component. Businesses and organizations usually donate as a result of their generosity, the relationship they have with the organization they are donating to, or their ties to the community. Many businesses and organizations have a line item in their yearly budgets for philanthropic giving. They may have a process, committee, or procedure to assess donation requests or goals and administer them.

The value of the donated amount, item, or service is very defined, and receipts are expected for the donation amount in most circumstances.

Things to keep in mind when you are making a donation

Donations are a very low-effort and easy way to help support the organizations and causes that you care about. They can be private or more public, be a large amount or a small amount, be tailored to fit your company’s budget, goals, and aptitudes, be ongoing, or one-time only. Here are a few more things to consider when making donations.

  • Understanding possible tax deductions. Most donations are tax-deductible, but there are specific requirements that can vary between states regarding dollar amounts, reporting, documentation, and more, so make sure to ask your accountant or tax preparer for clarification.
  • If you value privacy, donations may be the best choice for your business, as they don’t need to include any publicity or fanfare.
  • Only donations to 501(c)(3) organizations are tax-deductible, but you can donate to any cause or organization that aligns with what is important to you or your organization.

Sponsorship or Donation?

It depends on your company’s goals, aspirations, needs, and what’s important to you, first and foremost! A healthy philanthropic plan may also include a mix of both sponsorship and donation as well. Not all companies will have the bandwidth or need to support sponsorships, and some companies will get the most benefit from publicly supporting the right causes and programs.

How you can support Sleep In Heavenly Peace

We believe that all children deserve a safe place to lay down at night when they sleep. To achieve this goal, we don’t only provide tangible things like beds, but we also provide support and access to resources that families need in order to get their kids off the floor, and sleeping soundly.

We offer many great ways to support our cause, whether you are an individual, a large corporation, a small business, or an organization.

Learn more about how you can help!

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