In the nonprofit space, sponsors and donors are very important. These individuals and entities are the lifeblood of the 1.5 million+ charities that are currently registered in the United States. In fact, charitable giving climbed to $449.64 billion in 2019, one of the highest years for giving on record according to Giving USA.
However, contrary to popular belief, sponsors and donors are not the same thing. There is a distinct difference between the two types of charitable backers and how they should be treated and approached.
Let's break down the difference between a sponsor and a donor and why they are both important for your nonprofit or charity organization's fundraising efforts.
The most obvious difference between a sponsor vs donor is how regularly they contribute to a given cause. In most cases, a donor is classified as someone who gives a once-off monetary gift to a charity.
On the other hand, a sponsor is a person or entity who supports a nonprofit on a regular, ongoing basis. This could be over a matter of months or even years.
However, in certain cases, a donation may be viewed as sponsorship if the amount in question is large enough.
An example of a very generous donor is Warren Buffet who gave away $3.4 billion of his multinational conglomerate's stock. He gave the bulk of it to the Bill & Melinda Gates Foundation. Other recipients included the Susan Thompson Buffett Foundation, which fights poverty, the Sherwood Foundation that promotes women's rights, and the Howard G. Buffett Foundation that backs social justice initiatives.
Michael Bloomberg is another active donor. He has given away $767 million of his fortune to charities throughout 510 cities and 129 countries globally. His donations are normally to NPOs in arts, education, and public health. He also donates to causes that address climate change and opioid addiction.
Donations are normally subject to a tax rebate when donors do not receive anything in return for their gift. However, sponsorships are often provided marketing opportunities in return for their contributions. For example, when a company funds a charitable event, they can usually add their branding to the invitations and showcase it throughout the eventing space.
Yet, this distinction does not always apply. In certain cases, sponsorships may very well be tax deductible if it is in no way associated with any advertising or personal gain.
Examples of sponsorships like these include ongoing support to humanitarian groups like the Armed Forces Family Survivors Fund, Children's Cancer Research, or Family Assistance Foundation.
In cases like these, sponsorships are often tied to the support and wellbeing of a given family or individual who is sponsored by a single entity on a once-off or ongoing basis.
DID YOU KNOW? The human brain responds favorably to charitable giving. It's an established finding from neuroscientific research that giving to charity activates areas of our brain that respond positively to rewards such as food. This suggests it simply feels good to give!
Deciding to be generous, or cooperating with others, activates an area of the brain called the striatum. This is the same part of the brain that responds to other enjoyable stimuli like tasty food.
Most nonprofit organizations make a point of recognizing both donors and sponsors in some way, mostly by means of inclusion on lists on their websites, etc.
But, since sponsorships are normally ongoing, these benefactors tend to receive a higher level of recognition. For instance, sponsors are often given promotional airtime when a charity gets the opportunity for an interview in print, on TV, or over the radio,
DID YOU KNOW? Charitable giving can make you healthier and happier. Research in psychology shows a link between kindness and well-being throughout life, starting at a very young age. It has also been determined that spending money on other people is a more effective route to happiness than spending it on yourself.
Approaching sponsors for your nonprofit or charity differs from approaching donors, mainly because there is a big difference in the level of effort invested in the support you require from these different benefactors.
When it comes to donors, you can cast your net fairly wide. A donor does not even need to be someone who contributes to your cause with money. They can also offer their services or expertise free of charge.
For instance, a copywriter could donate their time and skills to create marketing content for your nonprofit. Or, a web developer could tailor an online platform to promote your cause.
Because there is such a wide scope for collaboration with potential donors, it calls for a more creative approach. Donation seekers should always be open to thinking wider than just dollars and cents.
On the other hand, ongoing sponsorships are more involved and require a far more formal approach.
When engaging with a large company or well-known philanthropist in order to discuss sponsorship, you will usually need to adhere to established channels and processes. In cases like these, it’s very important to dot all the i’s and cross all the t’s.
TOP TIP: Invest in the development of an attractive, professionally-written and designed prospectus. It should explain what your organization does and how a sponsor could benefit from association with your nonprofit. A serious sponsor is far more likely to come on board when you are organized enough to offer them an attractive presentation.
When it comes to the difference between a sponsor vs donor, it all comes down to:
Bearing this in mind when you approach businesses and individuals for financial backing can make all the difference in the rate of success.
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