Philanthropic Sponsorship: A Growing Movement

In recent years, NPOs have “taken full measure of the end of the welfare state,” says Johanne Turbide, co-founder and co-director of the Pôle IDEOS, which stands for Initiatives pour le développement d’entreprises et d’organisations à vocation sociale.

“Government grantmakers have seen their budgets diminish, so organizations have found themselves with reduced or more precarious traditional funding. They had to deploy all sorts of ways to vary their sources of income”, says Johanne, who is also a professor in the Department of Accounting at HEC Montréal.

As a result, NPOs often have to juggle between donation and sponsorship. First, there is a tax distinction to be made between the two.

According to Revenue Canada, a sponsorship occurs when a company makes a donation to fund an activity of a charitable organization and the company receives the benefit of promoting its brand image, products, or services.

A sponsorship takes place most frequently when an organization conducts a fundraising event.

Can a registered charity recognize a business for its donation and also issue an official donation receipt?

If the organization grants the same level of recognition to a company as to all other donors, without special treatment, and that this recognition is negligible, the charity can issue the company a receipt for the total amount of the donation.

If the organization grants special recognition to a company for its donation (for example, banners or product advertising), this is considered a sponsorship. A sponsorship is an advantage and its fair market value is usually deducted from the donation amount prior to issuing a receipt.

It is difficult, if not impossible, to calculate the value of a sponsorship. When the value cannot be calculated, the charity cannot provide an official donation receipt to the business. However, the business may be able to include sponsorship costs in advertising expenses if the sponsorship is reasonable and offered for the purpose of generating revenue.

How can NPOs solicit greater participation of the corporate world in philanthropy?

This is the challenge. Philanthropic sponsorship allows a company to symbolize its mission and values in a social way. Whether it’s a decision of the owner (s) or the employees, the commitment must be strategic and part of a longer-term vision.

Do you have a development plan that allows you to maximize revenue streams?

The research for a corporate partner can be done through different networks. Are you a local, regional, provincial or national organization? Proximity is key when identifying potential corporate partners. Second, what is the contribution and networking capacity of your board members? They have contacts and developed business connections that they can leverage for your organization. Don’t be afraid to ask board members for 5 to 10 serious contacts for potential corporate partners. Ask the board member to accompany you to the meetings when you make your presentation. The more you can tie your organization to the business, the more convincing your proposal will be and the longer the relationship will last.

Corporations want more visibility and events are an opportunity to generate additional revenue. How can organizations respond to these demands without burdening their organizational structure?

At Phil, we created the Caritas program to manage network fundraising activities (third-party activities). This program allows sponsors flexibility while maintaining a consistent and coherent image of the organization with a minimal time investment. It is a simple, flexible solution that allows companies to become more involved in the well-being of our society. For more information contact us for a custom evaluation.