Wednesday, August 27, 2014

Getting Event Sponsorships 101

One of the most asked questions I’ve received while working in non-profit fundraising is, "How do I go about getting sponsors for my event?"

Let me start off by saying I am a big supporter of having corporate sponsors cover an event's operating costs (and more, if possible) for several reasons:

- It lowers the risk and stress of putting on an event, knowing that the basic bills are covered in advance.
- It let's you focus on producing a quality event and fundraising for your cause.
- You can convey the message to your supporters that 100% of the funds they raise will go to the charity(s) you are supporting (and thank the sponsors for that, too).
So what's the key then to getting local, regional, and national companies to put up the sponsorship funds and services you need?  Is it the cause you represent, an innate sense of philanthropy, or just the right thing to do? You may get lucky and the answer might be yes to one or more of these, but more often than not it comes down to a fundamental business question: what's the ROI (Return on Investment) for the potential sponsor?

All too often I have seen very well-meaning fundraisers walk into a business, tell them they are putting on a local 5K or a personal long distance bike ride, and would like "X". But with limited ROI information they were soon on their way out, disheartened and disgruntled that the proprietor didn't want to support them. It only takes a few cases like this before you start to think it's a lost cause and why do it at all...

Here's the problem: you are not thinking like a business owner.

Whether it's the local grocer giving you a few cases of bananas through getting that Nike swoosh on your gear, you are wanting to tap into their budget or operations somehow. If you want the answer to a sponsorship request to be “yes” then know they are expecting some kind of return - hopefully above and beyond what they'll give you - in terms of either revenue (profit) or positive publicity (marketing, which hopefully then leads to profit). You need to be fully aware of this, and prepared to demonstrate accordingly.

I'm going to gloss over the first aspect, pure profit, because it's rare that this is a driver in most non-profit event sponsorships. Yes, you could be doing something like selling their merchandise at a booth and that's the hook. If that's the case then it's projected sales minus (their merchandise and sponsorship costs) and simple math will tell you if that's a good fit.

Where the real opportunity for most events lies is in the marketing aspect, and your ability to demonstrate you are a better ROI than your competitors (yes, you have competitors, there are lots of great causes out there wanting support).  I look at this from two aspects: traditional and unexpected.

Traditional - This is the baseline ROI the potential sponsor is expecting you to demonstrate. For example, if you sell the title sponsorship for your 5K for $10,000, what contractual items can they expect to receive? You need to have done your homework, pure and simple.

I hate to tell you this, but unless you have come up with something truly unique, it's probably a case of someone's been there, done that. But that's actually good news, as you can do some digging and find out what the market will bear and what the expected returns might be (much like getting comps before putting a house on the market). That can be as simple as consulting The Google and looking at other comparable events. Many times they will list their offered sponsor packages, especially for upcoming events. Or even simpler, call some similar event directors and ask them what they are doing. You might not want to do this in your local market, but there's no reason someone in a similar demographic around the country wouldn't want to chat.

Don’t forget about recording and reporting results, too. You can use effective tools to learn about the reach you’ve made, as well demonstrate effectiveness to your sponsors.  This includes things like Google Analytics, post-event surveys, and social media engagement.

Unexpected - Think of this aspect as the relationship-building portion of the sponsorship. This is you showing you're willing to go above-and-beyond the norm to make this even more valuable than what’s contracted.  More good news: it's usually low-to-no cost for you, and of high-perceived value to the sponsor.  You are only limited by your creativity, for example:

- You will line up 3 local TV interviews, wear the logo of the sponsor, and speak positively about them.
- You will write one or more blogs about their product or service and why it's important to the cause, and feature these blogs in your social media plan.
- At the start and finish of the event, the CEO will get to say a few words and present the awards.
- You find out that an employee at that company has a direct link to your cause and you find a way to honor them publicly.

You get the idea. This is all about making people feel extra valued, and often times gets them to thinking about how they can then do more for your event or organization.

Now what's left? Bringing it all home. You do that by having a professional semi-customized proposal and presentation ready to go for each potential sponsor. You've done your research and are ready to present why this is a good business decision AND why having them support your cause is important to you.

Fundraising is not walking in with your hat in your hands begging for money. You are asking for support for something you believe in and that there is a need they can help fill. Doing anything less than walking in prepared, your head held high with a positive attitude, is a disservice to that cause. Never forget this, as it's a game-changer when it comes to how you approach raising money and support.

And lastly, present yourself professionally relevant to the sponsors you're looking to sign. If you're courting a surf shop, don't go in wearing a 3-piece suit; if you're in a law firm, leave the board shorts at home. Regardless, you want your presentation to be clear, concise, and customized to some extent to that business. Make sure there's a leave-behind that summarizes the ask and benefits, and follow up as promised if they don't get back to you first. Say thank you - a lot.

And (truly finally) don't forget about in-kind product / service requests from a sponsor. They are often truly needed by your event and usually at a lower cost margin for the sponsor to provide than cash. The key here is you knowing what the real value of those items or services are to your organization versus paying for them out of your budget. Make sure for the most part in-kind sponsorships are absolute needs versus nice-to-haves.

No doubt about it, getting sponsorships is a tough sales job, but it is also very doable. Businesses have to market, so it's up to you to prove why your event is worthy of their support, and what value you are going to provide in exchange for that support.  Good luck, and we'll talk again soon! – Cb…

Thursday, August 21, 2014

Setting Your Organization's Budget On Its Head

What would you think if I told you that how much money you have – or think you will have – has nothing to do with your organization’s initial strategic planning? And in fact, you’re potentially stifling creativity by considering money first? For me, this insight began at a military headquarters, as we tried to plan the year ahead to train USAF pilots…

Flashback #1:
Back in the day, we would get allocated a set amount of money from the annual defense budget to train said pilots. Thanks to history, we had a pretty good idea of what it costs to fly a jet for one hour when you factored in things like fuel costs, maintenance needs, and the manpower required to support the fleet (for the sake of argument, let’s say that’s $500 per hour). So, when the numbers came down from above, it was relatively simple math: take X millions of dollars and divide by 500, and that was how many hours we would contract to fly for the coming year.

Ex: $100,000,000 / 500 = 200,000 flying hours

There was just one problem: we were in the business of training pilots, not flying planes.

Thanks to the efforts of some key people in the Operations and Logistics community, we joined forces and came up with a process to determine the Operational Requirement, as well as our Capability, and then convened together to see how things flushed out.  Capability limiters could either be by Operations (ex: the # of instructor pilots available) or Logistics (ex: the number of aircraft in the fleet mission ready).

This honest assessment by each group allowed us to consider the areas we were experts in - without the other’s input – so that when we came together, we had solid bases from which to negotiate. It also allowed us to plan for what we needed / were capable of doing, then being as efficient as possible and not over or under-producing.  I’m betting some of you already can see where this has application in your organization…

Operations – needs 1,000 pilots X 200 hours = 200,000 flying hours
 - using an avg of 200 hours needed to produce one pilot

Logistics – has the overcapacity to produce 243,500 annual flying hours
 - fleet has 500 aircraft that on average can fly 487 hours each annually

Outcome: Training HQ requests funding for 200,000 hours at cost of $100M (versus funding the capacity = $121M)

Flashback #2:
It’s strategic planning time for the year ahead for a small nonprofit. Based on historical data, it’s first determined that Development can get grants / fundraise $1M for the annual plan. Since it’s a thrifty organization, overhead costs are set at 15% - $150K - so the Programmatic budget is $850K, and they are challenged with planning that scenario to spend that budget. Sound familiar?


Using the military example above, here’s what I would suggest trying instead – and it costs you nothing to do it. Recall that during strategic planning, the sky is (initially) the literal limit, so it’s time to dream big and then tailor things down as capacity limiters kick in.

So instead of first saying, “We have X amount of programmatic dollars to serve our community,” start instead by asking the question, “What do we want to accomplish?”

Let’s use the example of a charity that does equestrian therapy to help people with mental health issues. Their mission is visionary and straightforward: by combining traditional counseling with the caring, feeding, and exercising of a stable of horses, they are able to dramatically improve the quality of life for those they serve. Up until now, they used the traditional budget process outlined in Flashback #2.

Instead, the Programmatic team gets together in October to consider the next year and asks themselves, “What do we want to accomplish?” (Requirement) AND the Development team is also meeting separately asking the same question, in terms of fundraising (Capability).

For the sake of argument, let’s say they served 350 people last year but after doing a local survey, they feel they need to increase 20% to 420. This is a rational, thought-out goal not encumbered (yet / maybe) by any limitations.  Meanwhile, Development has determined they can raise $650K in the coming year. Now it’s time to start doing some math, in terms of cost:

Program Cost for 420 Clients: $420,000
Two additional horses: $25,000
Additional stables / care: $30,000
Admin costs: $125,000
Total Budget Cost: $600,000

Without limiting their creativity on either end, they can go into the coming year with a sense of confidence that their plan is measurable and attainable, with hopefully some money left in the bank at year’s end. But what if Development had come up with a lesser number of funds raised, or Programs had a much higher client number to serve?  Well, then it’s time to constructively negotiate.

Since everyone has been honest coming to the table, it’s possible to now look at the models used to determine the Requirement and Capability, and see if things might be tweaked to increase Capability. Or if there really are limiting factors that cannot be overcome right now, reduce the Requirement.  Regardless, the organization will still be secure in their plan and budget, no matter what the outcome.

I realize that there are some organizations where budget availability is rightly the first player, for example, in the annual gift of a family foundation. But I would argue the majority of organizations could benefit from this Requirement versus Capability style of thinking. As I noted, it costs you nothing initially, and at the end of the day you’ll be thinking as creatively as possible and able to explain where you are going, and most importantly, how.