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| Re: Paying a percentage for finding marketing donors
Posted by Tony Poderis   on 10/6/2009, 9:57 am, in reply to "Re: Paying a percentage for finding marketing donors"
VIP Poster
While looking to have others on PND Talk pitch in, here are my follow-up remarks.
--- It could be simply a semantics issue, but you and your board continue to cite your sponsorship seeking and support from corporations as “marketing.” If you are indeed marketing for those businesses in some cause-related way, saying you are providing “added value,” that could be more of a true “business” deal than it is philanthropic. It is one thing to publicize a sponsor with logo placements, etc., but it is an entirely different matter if you encourage and even facilitate sales of their products.
--- Below is a link to an IRS webpage regarding non-profits and corporate sponsorships. How much, and the type of advertising and direct promoting you do for those businesses, should be reconciled to IRS regulations. Your accountant and attorney may be up on the rules.
--- However, if what you offer and provide are highly visible examples of sponsors’ names and credits, then those are quite typical and fall well into the sponsorship category we all know.
--- I suggest that you not worry so much about the “split” of funds in a typical type of sponsorship, because in those instances, the corporate sponsors themselves will internally determine which portion of their support is charitable and which is business expense. That is their responsibility. Example: When we hosted receptions to honor and credit sponsors, the expenses were ours internally, as were the expenses to develop signage, etc. The sponsorship contribution was booked in full, but our careful spending on the sponsorship was a development expense. When sponsors hosted receptions, purchased tickets, etc., they paid the expenses on a basis totally separate from the sponsorship contribution.
--- A possible concern would be if far more money was earned by your organization for activities on behalf of the sponsors’ businesses, as such income being “Unrelated Business Income.” (IRS)
--- A key point to remember is that your non-profit, by its very nature, attracts contributed income on what can be thought of as on an unlimited scale depending on the giving potential of a corporation and the public awareness and good citizenship benefits it will accrue. The “business” arrangements and understanding are quite different when, say the Sherwin-Williams paint company sponsors a day at Sea World. There, it is strictly quid-pro-quo. With your non-profit, the money given for sponsorship has everything to do with factors (philanthropic) other than being only good for business.
--- If your event fits with what I described in my initial post as being truly one justifying a “broker,” you can justify that action only when the broker’s clients are good prospects and when the event is the sole motivator for a sponsor---one which ordinarily not support your organization. It does no good at all to turn over to any outside paid solicitor your current supporters or those who could be.
--- Through it all, if in fact yours is mainly-mostly-all a sponsorship opportunity and endeavor based on receiving charitable corporate dollars, then in my not-so-humble opinion, there should be no need to worry about any percentage of the take for a paid solicitor or concern about any “split.” You should not hire any such person from outside of the organization to do what your board must do.
As stated above, the following IRS webpage could be useful:
http://www.irs.gov/charities/article/0,,id=113083,00.html
Best fund-raising wishes,
Tony
Tony Poderis
http://www.raise-funds.com
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