By Ken Ungar
In 2020, if you worked in sponsorship, you experienced the turmoil of postponed events and renegotiated deals.
While last year was generally depressing, we see an exciting trend on the horizon that will expand sponsorship’s impact to create something beneficial beyond the COVID-19 pandemic. Society and business will increasingly merge corporate social responsibility (CSR) and sponsorship.
Consumers Expect Social Responsibility
Before the pandemic, consumers began to reward companies who acted in a socially responsible way. 87% of consumers would purchase a product because a company advocated for an issue they care about, and 76% would refuse to buy a company’s product or service upon learning it supported an issue contrary to their beliefs.
In 2020, we started to see consumer attitudes shaped by the pandemic. The global health crisis created shared physical and financial challenges, causing many consumers to reevaluate what is precious to their lives. The pandemic formed a more common purpose for consumers and, in the economy, elevated the very idea of a company’s “purpose.” Consumers began to express strong opinions that brands should live their values and promises. With nearly two-thirds of consumers worldwide buying consistent with their beliefs, a similar majority will make purchase decisions in 2021 based on how a brand responds to the COVID-19 pandemic and economic crisis.
There is little doubt that the pandemic has accelerated business change at all levels in organizations worldwide. While before, consumers would reward companies that act conscientiously, consumers now expect companies to act responsibly. For this reason, companies that have CSR policies are taking them “off the shelf” and looking for ways to express them. Those organizations that have no CSR commitment are working quickly to establish them.
The Economy Strains Non-Profit Donations
While consumers are expecting more corporate responsibility, the COVID-caused recession battered non-profits. Although the impact varied by cause, non-profits experienced an estimated 76% decrease in revenues. In areas related to the pandemic (i.e., food insecurity or homelessness), the need continues to be urgent. However, for other non-profits, in many cases, donors do not have the resources to contribute as they have in prior years.
To date, corporate donations have been a relatively small portion of overall non-profit funding. As a percentage, the majority of corporate giving has been philanthropic. Cause marketing traditionally represented less than half of corporate-related sources. However, innovative fundraisers have connected the dots in such a way to change the way companies look at non-profit relationships. They see consumer demands driving social responsibility so that brands must express their CSR commitment through marketing and not just through their checkbooks. A formal relationship demonstrates commitment in a way that a mere donation cannot.
Sponsorship Will Be A Vehicle for Non-Profit / For-Profit Collaboration
As a company’s brand spokesperson, marketing teams now find themselves front and center in demonstrating their brand’s social commitment. Of course, many companies are no strangers to cause marketing. Cause marketing, which aligns an organization with a social cause, has taken many forms, including facilitated giving, employee involvement, or purchase-triggered donations. Many of these programs increase brand awareness or enhance loyalty. However, current applications of cause marketing do not leverage sponsorship to its full potential.
Historically, cause marketing has benefited both brands and non-profits. However, because of the sheer expense of ongoing corporate or personal donations, programs that rely on philanthropy will have a short shelf life. People give what they can afford and generally at year-end. A donation-based cause marketing campaign’s shorter duration does not provide the brand much time to demonstrate a social responsibility commitment.
As marketers on the non-profit and for-profit sides look for the best platforms to express a CSR commitment, three reasons will lead to sponsorship as the platform of choice.
First, the long-term nature of most sponsorships provides an opportunity for sustained brand-building.
Second, sponsorships generally include integrated marketing campaigns encompassing multiple marketing tactics. While a sponsorship may consist of a donation-based component, it can also leverage other tactics.
Third, in sponsorship, sponsors experience enhanced image through its relationship with the sponsored property. In the minds of consumers, the positive image of the property transfers to the sponsor. This “image transfer” will also make sponsorship an effective platform to improve brand image via purpose-driven sponsorships.
For these reasons, as brands look to express their CSR through marketing, marketers will leverage sponsorship more and more.
How For-Profits and Non-Profits Can Get Started
- Non-Profits will Confirm What Makes For A Good Partner
Non-profits protect their credibility. Without it, non-profits cannot advocate for causes. Because credibility can be impacted by “who you stand on stage with,” great care will be taken in choosing external sponsor partners.
Model guidelines, like the following, will be developed by non-profits:
- Does the proposed activity promote the mission of our organization?
- Will the proposed relationship promote or enhance activities consistent with our mission?
- Will the proposed relationship maintain our organization’s reputation?
If non-profits do not have formal guidelines like the preceding, their boards of directors will require them. If they have policies, there will be interesting conversations at the executive and board levels about potential sponsorships.
- For-Profits Will Reexamine Their CSR Policies
Consumers can smell fraud. Companies that do not live up to their stated corporate social responsibility policies will endure more public relations pain than organizations that have no social commitments at all.
Companies will review whether their CSR policies stand up to public scrutiny before integrating those programs into consumer-facing sponsorship campaigns. For instance, it is okay for a corporation to align with an environmental non-profit if it has a CSR commitment to sustainability. However, when that commitment is on display in a year-long environmental sponsorship, the company must be able to not only talk the talk but walk the walk of environmentalism.
- Both Sponsors and Non-Profits Will Adjust to their New Relationship
Collaboration in non-profit sponsorship will require new ways of working together. By its very nature, health care sponsorship will be more sensitive than one in sports. Consequently, processes that are common in typical sponsorships may be more sensitive in the non-profit context. A few examples come to mind:
- Non-profits will want more say in the sponsor’s creative process. A sports team may only want to confirm the correct use of its logo. On the other hand, a non-profit may need creative input on advertising copy or imagery.
- To control adverse publicity, sponsorship morals clauses in sponsorship agreements cause the termination of relationships when bad things happen. Adverse publicity may be a grayer area for non-profits. In sports, an athlete arrest may be a trigger for a morals clause termination. However, is a single accusation of employee discrimination enough to trigger the end of a social justice sponsorship? Organizations must resolve these questions at the onset of a sponsorship.
As an industry, sponsorship practitioners will provide input on various strategies to leverage CSR sponsorship’s growing trend. In the coming weeks and months, organizations will be developing best practices that support authentic marketing campaigns. Additional considerations will be explored, like the tax impact of non-profit sponsorship on charities.
Nonetheless, the movement towards “doing well by doing good” will only pick up momentum.