Corporations want to leverage relationships for business-building reasons and nonprofits should charge them additional fees when including marketing benefits.
According to the fourth annual IEG Strategic Philanthropy Study, more than three-fourths of nonprofit organizations continue to provide corporate donors with business-building rights and benefits without charging them the same fees that marketing-driven corporate partners would pay.
Despite plenty of industry discussion, and the overall fact that most nonprofits have grown much more savvy about sponsorship and the considerable value their organizations bring to an association with corporations, the percentage of nonprofits that treat marketing benefits–e.g., title of programs and category exclusivity–as donor recognition tools has remained virtually unchanged since IEG’s first strategic philanthropy survey three years ago.
Seventy-six percent of nonprofits do not charge corporate donors a rights fee in addition to their contributions for the ability to access marketing benefits (see Chart 1).
Perhaps not coincidentally, the same percentage of the online survey’s 187 respondents said they were unsure of what they should be charging for marketing benefits, indicating an awareness that they should be charging something. This was by far the largest challenge faced by nonprofits in working with donors who seek additional sponsor-like benefits (see Chart 6).
The inclusion of valuable benefits without requiring an additional fee does not appear to be a last ditch effort to secure a contribution. Rather, the vast majority of nonprofits–86 percent–proactively discuss such benefits as part of their initial approach to donors (see Chart 2).
Donor Interest In Additional Benefits Remains Strong
One-third of nonprofits report that more than seven out of 10 corporate contributors request marketing benefits in exchange for their donations (see Chart 3).
Nearly half of nonprofits say the majority of their donors request such benefits, while only seven percent of survey respondents said they had no donors seeking sponsor-like recognition and perks.
In addition, corporations continue to be interested in strategic philanthropy–supporting their gifts to nonprofits with additional spending from marketing and other budgets to promote the involvement.
Thirty-five percent of nonprofits reported that the majority of their corporate relationships involved donations supplemented with additional spending to advertise and market the relationship between the two parties (see Chart 4). Only 13 percent said they had no contributors who practiced strategic philanthropy.
Although those survey results demonstrate that a large number of corporations remain attracted to strategic philanthropy, the findings don’t show growth in that number over time. This may mean that predictions made by some in the industry that almost all philanthropic relationships will soon incorporate strategic philanthropy elements were perhaps overheated.
Sponsorship, Marketing Staffs Take Back Seat To Development
Continuing a pattern begun with last year’s survey, development departments at nonprofits have emerged as the dominant area for managing relationships with donors who also receive marketing or sponsorship benefits.
The current survey found 60 percent of nonprofits handle such relationships out of the development office (see Chart 5). That number was only 35 percent two years ago. Consequently, the percentage of respondents saying the marketing department was most responsible has dropped from 36 percent to 17 percent in that period.
While on one hand the trend is understandable given that the relationships are primarily philanthropic in nature and thus the proper domain of development, it also likely explains why nonprofits struggle with valuing additional marketing benefits and end up not requiring corporate donors to pay a fair price, or any price, for them.
Were marketing or sponsorship staff primarily responsible, it is likely those personnel would demonstrate greater sensitivity to leaving dollars on the table, knowing those same benefits could very well attract interest and a fee from marketing-driven sponsors.
Even If The Price Is Wrong, The Pitch Is Right
Nonprofits are most likely to include additional credit on collateral materials and the right for donors to promote their partnerships in their own marketing initiatives in their approaches to corporate donors.
Nonprofits have seemingly taken their cue on what to include in those conversations from what the donors are most interested in, judging by the relatively strong alignment between the benefits donors most often seek (see Chart 7) and those served up by the properties (see Chart 8).
The only exception to that rule: Despite the relatively low level of interest from donors in acquiring additional event tickets and hospitality benefits, nonprofits said they were more likely to include them in their pitches to donors this year.
Definitions Used in the Survey
Strategic Philanthropy: Using philanthropic dollars to create social and brand value. (Example: A retailer makes a grant to a museum but spends additional marketing dollars to promote its support of the museum.)
Corporate Donor: A company that provides funding or in-kind services to a nonprofit organization from a budget or department that has the primary purpose of being philanthropic–for example, corporate contributions, foundation, corporate giving–as opposed to from a budget or department that is charged with driving business, such as marketing, promotions or advertising.
Sponsorship: A fee paid to a property by a corporate entity in return for access to the property’s exploitable commercial potential.
Cause Marketing: A sales-driven strategy that ties a company’s donation to a nonprofit to purchase by consumers of the company’s products or services.