Cause marketing and sponsorships are commercial, mutually beneficial relationships between non-profits and for-profits. But it’s important to distinguish the two.
Sponsorship: A for-profit company provides financial support to a non-profit organization’s mission or event; in return, the non-profit organization promotes the for-profit company’s support. The company builds goodwill, and the organization earns revenue. An example of sponsorship is Goodyear Tire & Rubber’s sponsorship of the Cotton Bowl, which the Cotton Bowl Athletic Association, a 501(c)(3) organization, operates.
Cause marketing: A non-profit organization permits a for-profit company to use the organization’s name or logo to affect the sale of the company’s product directly; in return, the for-profit company provides financial support to the non-profit organization in the form of a percentage or flat rate of the sales promotion. The company earns profits from the sales and builds goodwill, and the organization earns revenue and exposure from the sales promotion. An example of cause marketing was Yoplait’s Save Lids to Save Live campaign; for each pink lid from a Yoplait yogurt container returned by customers to General Mills, General Mills promised to donate ten cents to the Susan G. Komen Breast Cancer Foundation, up to $1.5 million per year.
Now that you can identify sponsorships and cause marketing, the next step is developing a comprehensive strategy for whichever relationship you choose. Compliance with state charitable solicitation registration laws, state commercial co-venture laws, federal and state false-advertising laws, and federal tax laws is essential to prosperous sponsorship and cause marketing campaigns
The Texas Hospitality and Non-profit Law Center provides this material for informational purposes only. The firm does not intend for this material to constitute legal advice. Nor does this create a client-attorney relationship between the firm and any recipient.