Corporate Sponsorship: Definition, Examples, Benefits & Risks

Corporate Sponsorship

Investopedia / Madelyn Goodnight

What Is Corporate Sponsorship?

A corporate sponsorship is a form of marketing in which a company pays for the right to be associated with a project or program. A common template for corporate sponsorships entails a collaboration between a nonprofit organization and a sponsor corporation, in which the latter funds a project or program managed by the former in exchange for recognition.

Corporations may have their logos and brand names displayed alongside of the organization undertaking the project or program, with specific mention that the corporation has provided funding. It is not the same as philanthropy, which involves donations to causes that serve the public good that may not yield any return—branding or otherwise—to the donor.

Understanding Corporate Sponsorship

Corporate sponsorships are a tool used to form brand identity and brand image via increased visibility. While supporting a popular and socially conscious cause may be mutually beneficial to both parties, a corporate sponsorship is not a donation; it is a business deal. Corporate sponsors often characterize their sponsorship activities and their benefits as "doing well by doing good."

Key Takeaways

  • A corporate sponsorship is marketing in which a company pays to be associated with a project or program.
  • Corporate sponsorship is common for programs at museums and festivals, but is also seen in the commercial sphere, like the many athletic facilities and sporting events that bear a company's name. 
  • Corporate sponsors also expect some measurement of the exposure they received, for example how many Meta (formerly Facebook) posts carried their logo.

The conventional wisdom is that a corporate sponsor facilitates a mental link between a brand and a popular event, program, project or person, and customers—the so-called "halo effect." The best corporate sponsorships involve companies and sponsorees that have a link, such as a sports apparel manufacturer sponsoring a race. But sponsorships involving partners that have little relationship to one another can also work well, especially if the demographics match.

Corporate sponsorship is common for programs at museums and festivals, but is also seen in the commercial sphere, such as athlete endorsements. For example, athletic facilities may bear the name of a company and the name of a sporting competition may be proceeded by the name of a company. The level of recognition depends on the goals of the sponsor, as some companies may want to further a particular project or program without drawing public attention.

Other corporate sponsorship examples involve promoting product sales that benefit a cause, campaigns that seek donations at the point of sale (purchase plus), licensing involving logos that send a portion of sales to a charity, cobranded events or programs, and social or public service marketing programs that encourage behavioral change. 

When Corporate Sponsorship Goes Wrong

Sometimes, due to the actions or policies of the corporate sponsor or the sponsoree, one party may back out of a deal. It can be due to creative differences, such as if an art exhibition or performance featured controversial material or opinions, or other matters, such as if the corporate sponsor imposes conditions that prove unpopular.

When cyclist Lance Armstrong's performance-enhancing drug use came to light, eight of his sponsors dropped him in a day.

What Donors Want

Donors, because of their monetary support, can expect to have some say over how their money is used (creative control) and how they are presented to the public. For example, corporate sponsors will expect to see their logos on signage and event merchandise, such as t-shirts, cups, banners, web and print advertising, in social media and emails marketing, invites and more. They will also expect to be mentioned frequently in public communications, as well as have the opportunity to see the facilities, meet and attend any events as VIPs.

Corporate sponsors may also expect some measurement of the exposure they received, for example how many billboard ads or Facebook posts carried their logo, or the number of email marketing campaigns and their open rate.