Issue No. 4 - February/March 2002
Making Sponsorship Pay for Small Business
by Dr David Corkindale
Small businesses often want to offer financial support to the communities they are part of, but stringent economic times can make this difficult. They are continually asked to sponsor very worthy causes but are unsure of the commercial gain to them. A form of sponsorship has developed which promises to solve this dilemma by providing both financial support to a charitable activity and a commercial return to the sponsor. How does it work—and does it really pay off?
Cause—related marketing is a type of sponsorship linking the extent of donation by the sponsor to the degree of customers’ purchasing or support of the sponsor’s products or services. It has been devised in response to boards’ and company owners’ demands for more accountability for the money spent on sponsorship.
A simple example would be where a small business offers to donate $5 to a local charity for every new client that comes to them with some form of “proof” that the charity sent them—for an example, a copy of a charity newsletter that carried some promotion for the sponsor.
There are many ways in which a sponsor and a sponsored organisation can do this. Essentially, it is a “payment—by—results” program as far as both sides are concerned. So, a dry—cleaning business might devise a program to sponsor the local scout group. The dry cleaner could agree to sponsor the scouts’ trip to an interstate Jamboree, and in return, the dry cleaner would get publicity in the scouts’ newsletters. Perhaps the good deed might even get into local papers. The arrangement might be that for each person who has $10 or more worth of dry cleaning done and also presents a scout membership card, or some form of special card devised for this sponsorship, the cleaner will donate $2 or some agreed upon amount.
It has been estimated that more than $20 billion is spent annually to secure sponsorship naming rights and approximately $100 billion to promote th...