As a percentage of nonprofit organizations’ total number of corporate relationships, marketing-driven sponsorships declined over the past year, but in terms of share of revenue, the portion earned from sponsorship jumped dramatically.
According to IEG Sponsorship Report’s eighth annual survey of nonprofits, only 25 percent of respondents said that sponsorship accounted for the majority of their corporate relationships. Philanthropy-based ties were the majority for 55 percent of nonprofits, while another 20 percent said their deals were evenly split between the two types.
A year ago, 30 percent of nonprofits said sponsorships comprised the lion’s share of their deals, while 47 percent said philanthropic arrangements were the majority and 23 percent cited an even split.
However, the trend is reversed when considering dollar amounts, not number of relationships. Thirty-nine percent of nonprofits said that sponsorship accounts for the bulk of their corporate income–up from 24 percent in 2010. Philanthropy pulls in the majority of revenue for another 54 percent (down from 62 percent last year), while seven percent reported equality between the two.
Those results suggest that many nonprofits are following the trend of having fewer, bigger sponsorship deals–allowing them to command higher fees by concentrating marketing value in the hands of a smaller number of corporate partners.
Chart 1: In terms of number, which of the following accounts for the majority of your corporate relationships?
Chart 2: In terms of income, which of the following accounts for the majority of revenue from your corporate relationships?
The survey’s results also pointed to a few other signs that nonprofits are taking more strategic approaches to sponsorship and seeing positive outcomes as a result.
The number of respondents who defined sponsorship as a separate entity from corporate giving increased from 34 percent last year to 40 percent this year, while those who limit sponsorship strictly to specific events or programming dropped from 50 percent to 44 percent.
Chart 3: Recognizing that more than one of the following statements could be applicable, please select the one that best describes your organization’s approach to sponsorship.
Percentages do not equal 100 due to rounding
Perhaps because nonprofits are demonstrating a better understanding of how sponsorship benefits differ from philanthropy, they reported slight improvement in corporate philanthropy contacts’ perception of value derived from those benefits.
Just about half of respondents confirmed that corporate giving personnel see the value in a nonprofit’s marketing benefits, compared to only 45 percent who agreed with that statement in 2010.
Chart 4: Do you believe that your corporate contacts in traditional philanthropic positions/departments recognize the value of marketing benefits you offer?
But despite those positive developments, most of the remaining survey results continued to paint a picture of nonprofits that are not deriving full value from marketing-driven corporate partnerships.
The sector took a step backward in terms of giving away valuable marketing benefits to philanthropic corporate donors rather than charging discrete rights fees for them.
The number of nonprofits who included sponsorship benefits as part of their relationships with donors increased to 64 percent this year after declining from 79 percent to 60 percent between 2009 and 2010.
To be fair, there is a gray area regarding this issue, as noted in some of the additional comments from respondents: Some nonprofits report that they account for the value of marketing-related benefits in determining the donation amount, but do not consider that to be an additional payment or fee.
Chart 5: Do you provide corporate donors with marketing-related benefits without requiring any additional payments or fees?
The organizational approach to sponsorship at many nonprofits also may be limiting their ability to maximize marketing-related revenue. The number of organizations with a dedicated sponsorship department declined from 18 percent in 2010 to 12 percent in 2011, while the number of nonprofits who treat sponsorship as a function of development grew to nearly three out of four.
Chart 6: Which of the following best describes where primary responsibility for sponsorship resides within your organization?
Percentages do not equal 100 due to rounding
In a similar vein, the number of nonprofits that centralize corporate relationships within any one department shrunk from 30 percent last year to 21 percent this year, while those organizations that have corporate arrangements spread over four or more departments grew from 21 percent to 34 percent.
Chart 7: How many departments within your organization have corporate relationships?
Percentages do not equal 100 due to rounding
Nonprofits also say they are having a harder time getting in the door with marketing and other corporate departments outside of philanthropy.
In 2010, the number that said they had difficulty obtaining meetings outside the contributions area was only a slight majority (52 percent), but has grown to nearly six out of 10 in 2011.
Chart 8: Do you have difficulty securing meetings/conversations with corporate contacts in marketing and other departments outside of corporate philanthropy?
In identifying specific challenges to increasing sponsorship revenue, the number one obstacle was “difficulty demonstrating return on investment for corporate partner,” selected by nearly sixty percent of respondents.
The top choice from 2010–“difficulty identifying marketable assets to offer”–was selected by only 42 percent of nonprofits in 2011, down from 52 percent.
Chart 9: What challenges do you face in growing sponsorship revenue?
Nonprofits reported a decline in the number of their corporate relationships that could be defined as “strategic philanthropy”–donations supported by marketing, advertising or promotional efforts.
The percentage of respondents who reported that half or more of their deals fit the definition of strategic philanthropy fell from 42 percent to 35 percent from 2010 to 2011.
Chart 10: What percentage of your corporate relationships involves the company providing a philanthropic donation and supporting the relationship with marketing, advertising or promotional efforts?
Percentages do not equal 100 due to rounding
Although fewer corporate partners seem interested in committing their own resources to promoting their corporate contributions, a slightly higher number are requesting marketing-related benefits to be built-in to their donation agreements.
The number of nonprofits reporting that half or more of their donors request marketing benefits as a condition of donating rose from 55 percent last year to 58 percent this year.
Chart 11: What percentage of your corporate donors request marketing-related benefits?
As for what those benefits are, the two most popular types remained the same this year, while category exclusivity jumped to third, rising from just 37 percent of respondents who identified it in 2010 to 62 percent in 2011. A new choice in this year’s survey–inclusion in social media efforts–was a close fourth at 61 percent.
Chart 12: What kinds of marketing-related benefits are corporate donors seeking?
Nonprofits remained roughly evenly divided on the topic of whether to allow corporate partners to pay for all or some of their commitment through consumer and employee fund-raising, with just over half allowing either practice.
Chart 13: Do you allow sponsors to “pay” for part or all of their sponsorship commitment in the following ways?
