There are many fundraising events where business and/or individual sponsors play an important role.  Here is a great question that we recently received on this topic:

What is the role of sponsors? Is the money raised through sponsors only used to help reach the goal or can some funds be used to help with running the event?

Thanks you for your time,
Claudia Booker

First let’s clarify that by “sponsors” we are referring to companies who are recognized in an event program or other advertising. In that case companies will put the donation into the “advertising” category of their accounting. Because you are offering them advertising in exchange for the money, they generally cannot claim it as a charitable donation for tax & accounting purposes.  It would be best to consult with an accountant regarding more specifics about tax receipts.

Unless the donor specifies otherwise, all money that comes in for an event can be used for planning and running of the event.  Most people will assume that some of their money must go toward planning and overhead. However, many supporters also want assurance that the bulk of their gift goes toward your cause, and its programs, not administrative costs.

This is another way that corporate sponsors can help out.  If you can get a company to “underwrite” the cost of a certain aspect of the event, then individuals can make donations to the charity and know their gift is going toward mission.  For example, if you were hosting a walk-a-thon, the cost of the sound and timing equipment could be paid for by a particular company.  Your organization would recognize them through banners, recognition in flyers and publicity, as having donated this specifically.  Then when walkers get pledges or make personal donations, their gift goes toward the cause more directly.

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Posted on 16 July 2008

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4 Comments For This Post

  1. Danielle Grandine says:

    What about outlining in the ROI benefits in the inital sponsorship proposal that x amount of funds from the sponsorship will pay for event costs and that the company will also receive a tax receipt for a certain amount of their sponsorship that is directed to the proceeds of the event and supports the cause.
    For example – an Entertainment sponsor:
    1/2 of their sponsorship amount pays for the total cost of entertainment
    and the other 1/2 of their sponsorship is donated and they receive a tax receipt.

  2. Sandra Sims says:

    Danielle, that’s an excellent point. It’s important to give sponsors as many benefits as possible, and it has to be something that they really see the value in. Outlining them clearly in the proposal right up front is best.

    I’m not sure if separating out advertising vs. donation is ok with the tax man. Maybe someone else who is more experienced with that could chime in here. Or you could ask someone who specializes in accounting for non profits.

  3. Danielle Grandine says:

    You can think of it in relation or very similar to receipting for a portion of the ticket cost to an event – part of the ticket cost goes to pay for the event cost and the portion above and beyond the value of the ticket cost that will be donated to support the cause of the event can be receipted to the individual.

    I.e. the cost of attending the event is $175 and the actual ticket price is $250 – they could receive a receipt for $75.

  4. Sandra Sims says:

    a-ha, now that makes sense. That’s a great illustration, thanks Danielle!

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