Guest Post: How to go from pro bono to corporate sponsor

EDITOR'S NOTE: I've been immersed in Stephen Covey's 7 Habits of Effective People lately, and one of the most significant lessons I'm getting from it is the benefit of striving for solutions that are not me-based or them-based or even compromises, but we-based, synergistic solutions.

That's exactly what designer and Marketing Mentor client Jonathan Cleveland did to turn around a situation with a pro bono client. I loves me a win-win situation—and Covey would be proud! And now, here's Jonathan...

A recent tip from Peleg changed my status from “in-kind” donor to Corporate Sponsor for a nationally recognized non-profit client. Here’s how it happened.

For over 6 years, my firm, Cleveland Design, has done work for this non-profit at a reduced fee, but the donated “time” has never gotten me much exposure, which is one of the reasons I did it. I was always stuck in the Thank You list next to the company that donated the napkins.

When I first approached the client about improving our status, they claimed they didn’t have a category to put us in since we weren’t making a cash donation. Eventually they came up with “Marketing and Design Sponsor,” which was better. But I kept seeing the other companies listed above us and I knew our time was more valuable then the cash they were donating.

Peleg’s tip was simple: Invoice the client for the full value of the project, then turn around and write them a check for the portion you want to donate.

I approached the client with this plan and they were open to investigating it with their higher ups and legal department. Because this client is on a retainer with us, it was easy to set up a contract to reflect what we would bill them each month and what we would donate each month. Soon, the contract was signed by both parties and we automatically became an official “Corporate Sponsor.”

This way of giving is beneficial to all parties, and gives us the advantage of being a major donor and recognized as a Corporate Sponsor. It also gives us an advantage for tax purposes, since donated time does not count for charitable gifts, but donated cash does.

Plus, being seen as a Corporate Sponsor has changed our status in the community that this non-profit serves. At past fundraising events, we were invited but had to wait and see if there were empty seats at the assigned dinner tables. Now, we get one of the prime tables up front and our logo is plastered all over the promotional collateral and signage.

This is now the only way we will work with non-profits in the future. It gives us the recognition we deserve for our talent and time. And, it turns into great free publicity for our firm.

Comments

[Jess Sand]

This is a great way to get the exposure Cleveland wanted, but I feel compelled to point out that the "tax break theory" of billing for services then donating the fee back to the nonprofit is an oft-repeated myth.

There is no tax break here because while you do get to deduct the donation from your business expenses, you are also taxed on the income generated by the process (since you're billing the client). This might actually make your tax situation worse, as it could bump you up to a higher tax bracket.

Just felt this was worth pointing out, as I hear this approach repeated over and over again, without regard to its accuracy.

Some other options for maximizing the impact of your donated services might include:

- Asking the nonprofit to refer you to colleagues;
- Asking for ad space in one of their publications;
- Asking for a news blurb in their newsletter;
- Asking for a link on their website;
- Including an attribution line on all materials.

Best,
Jess

[the communicatrix]

Jess - Have you actually spoken to a CPA about this? I'm curious b/c I had the same reaction you did when Peleg told me about this. But he did this for years, and is pretty buttoned up about money stuff.

Would love to hear from any lurking financial experts, if you're out there...

[Jess S.]

Yes, I ran this by my accountant when I first heard it to make sure I wasn't missing something.

Essentially, it looks like this:

Income from pro bono client = Income tax on this amount

Donation of invoice amount = deduction from income tax

So at best, what you save on the deduction cancels out what you pay in income tax from invoicing and collecting that amount in the first place. At worst, increasing your income by invoicing for the pro bono amount bumps you up to higher tax bracket, resulting in higher income taxes all around.

It's a practice I hear repeated over and over again but, sadly, it's just not true! Man, do I wish it were, though - as a socially conscious communications studio, I make pro bono work a large part of my business plan. Pro bono work, at the end of the day, really is a labor of love!

Best,
Jess

[Ilise Benun]

Thanks Jess, for clarifying the tax implications.

I think that for promotional purposes, it makes sense to get the higher profile exposure, even if it has an effect on the financial situation.

[Jonathan Cleveland]

I think there are two ways of looking at this. I'm going to guess that Jess is self-employed and if that is the case then he is correct with his outcome of it. But Cleveland Design is a corporation and the additional income of over $35,0000 doesn't change our tax status at all. But the donation of that does count as a charitable gift for our taxes and we do benefit from this. Of course this becomes splitting hairs at some point and everyone knows I'm not getting rich off this write-off. So the true benefit is infact all of the exposure and the 5 points that Jess made about maximizing the impact. All of which we do as well with this client.

[Jonathan Cleveland]

oops, meant $35,000 not million!

[MrPositioning.com (Stanley Bronstein)]

The trick to getting corporate sponsorship is to build up a community that the potential sponsor wants to reach. It's just that simple.

If you have a set of eyeballs they want to reach, AND you do the legwork to convince them that you have those eyeballs, then you'll get a corporate sponsor.

The biggest help I've found in mastering my to-do list is proper prioritizing.

We MUST learn how to prevent the minor things in our lives from taking over the major things in our lives. In other words, that which is truly important should never be at the mercy of that which is truly not so important.

That's not an easy thing to do.

When I recently toured the country and interviewed over 80 successful people for my soon to be released third book, one common trait I found was that almost all of them were able to properly prioritize matters in there lives. Somewhere along the way, they had learned how to make sure the truly important things were not at the mercy of the unimportant things.

Take care.

[MrPositioning.com (Stanley Bronstein)]

I'm sorry, my last comments were mixed up. I meant to delete some text from what I wrote and it got all messed up.

My apologies:

As I said in the beginning of my post:

The most important thing is to build a community the potential sponsor wants to reach.

Once you do that, you have to reach out to them and make them aware you have access to that community. If your community is powerful enough and it is what they are looking for, they'll be happy to sponsor you.

Take care.