Teaming Up with For Profits: A Winning Combination (Part 1)
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Adequate funding is essential for all not for profits, and partnering with a for profit company can be a rewarding option to guarantee revenue and a win-win for everyone involved. According to a report from IEG, a company specializing in sponsorships, North American companies spent about $2 billion on cause-related partnerships in 2012—an appetizingly large pool of potential revenue for not for profits. However, the risk in these relationships tends to fall disproportionately on the not for profit partners, either because they’re putting their most substantial asset at risk (their name) or because their hope for financial support can cloud their exercise of due diligence. These errors can result in a loss of public trust or costly litigation.
In many states, cause-related marketing campaigns are subject to registration, contract and disclosure requirements. Additionally, they often have potential federal tax implications on the beneficiary not for profit. It’s crucial that when embarking on a marketing venture with a for-profit company that not for profits realize what is at risk and take steps to protect themselves and their names.
But, don’t let the liability scare you! Take it from us, we believe in healthy collaborations. Our most recent venture was teaming up with our long-time ACT partner, Clearbrook, a not for profit organization devoted to enhancing the lives of children and adults with disabilities. We sponsored the Active Care Color Blast 5k and encouraged our employees to complete another 5k Challenge. In the end, our employees gathered friends and family and raised nearly $2,500 to benefit Clearbrook.
Think outside of the box and don’t be afraid to reach out to for profits. Most companies have solid corporate citizenship programs in place and are always looking for new organizations to support. If you have questions about risks involved, contact Assurance. Teaming up to help others is two-way street that’s beneficial all around.
Check out our Not for Profit blog next month to learn more about these risks and how to prevent them.
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