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Charities Not Charging Enough for Marketing, Sponsorship Deals

(Sept. 7, 2004) Most charities are not charging their for-profit partners enough fees for marketing and sponsorship arrangements, according to a new study by Chicago-based IEG, a firm which studies the sponsorship industry.

The IEG SR Strategic Philanthropy Study surveyed 145 nonprofit managers about their marketing and sponsorship deals. The study found that although nine out of 10 respondents said they offer marketing benefits in their grant proposals and 76 percent offer their donors rights to promote their partnership, only 23 percent of respondents request a servicing fee.

The reason? Seventy-two percent of those surveyed said they were unsure of what to charge. In addition, 45 percent were uncertain about what benefits companies wanted, while 44 percent cited a lack of understanding among charity employees about the benefits of partnering with for-profit organizations.

In a seminar held by IEG to address strategic philanthropy, Lesa Ukman, president of IEG, recommended that charities add 15 to 25 percent to the fee they already charge companies in marketing promotions to offset the costs.

The recommended fee may seem high to some nonprofits that fear alienating their donors; however, the return on the donor's 'investment' increases with their philanthropic partnerships. It is a give and take relationship, the report suggested, as many corporations benefit from their marketing relationships with nonprofits.

What Partners Want

Released in July, the report found that more than half of the 145 respondents said their donors requested marketing benefits. In contrast, only nine percent reported that none of their corporate donors expressed an interest. The most requested benefit--the donor's right to promote their partnership in their own marketing initiatives (67 percent).

Also high on the list of requests were:

  • credit on collateral materials (66 percent),
  • category exclusivity (61 percent),
  • right to conduct a cause-related marketing campaign (41 percent),
  • title of a program (40 percent),
  • tickets and hospitality (30 percent), and
  • information related to a property's database, ID in guaranteed media and pass-through rights for customers, vendors and other business partners (19 percent).

All of these benefits come at a price to some nonprofits, which accrue administrative costs during joint marketing promotions, according to IEG.

The increasing number of informed consumers has affected the role of businesses in the global economy. The report also stated that a corporation's community involvement, including philanthropy and cause-related marketing, may affect a consumer's decision to:

  • buy a certain product or use services,
  • a government's decision to grant a license to operate,
  • a financial analyst's decision to recommend investment in the company,
  • an individual's decision to seek employment with the firm.

Other research by IEG also shows that a large portion of a corporation's resources are comprised of intangible assets, such as reputation, brand equity and alliances. The role of corporations is changing, and consumers expect them to have responsibility to not only their shareholders, but also to their employees and community.

The study is not yet available, but additional data can be obtained through the IEG Sponsorship Report. For more information, visit www.sponsorship.com/sp.

 

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