Tips for Charities on How to Get the Most Out of Marketing Deals With Companies

To help charities get the most out of marketing promotions with companies, non-profit officials and experts who are experienced in brokering such deals offer the following tips:

Distinguish between marketing and fund raising. Fund raisers like to stress the similarities between raising money and marketing, but experts say that forging deals with businesses is actually the opposite of winning contributions — and much harder.

Much of the effort in getting outright gifts from donors comes before they actually make a contribution: Once donors decide to give, they usually remain loyal supporters and the charity’s most likely source of future contributions.

But when companies give licensing or sponsorship dollars to charities, their main goal is to sell products or services.

Once the company decides to enter the relationship, the work is far from over for charities. They must continue to demonstrate tangible results from the promotion to keep the company interested. Companies are anything but loyal in such arrangements and quick to end promotions that don’t meet their marketing objectives, experts say.

“You have to continually demonstrate return on investment by way of profits,” says Tanya Andrews, director of development at the Children’s Museum of Tacoma, in Washington State. “It’s no gift from the heart.”

Set minimum fees. Some charities shy away from setting a minimum amount for their marketing deals; they say it interferes with their ability to negotiate with companies. But groups such as Habitat for Humanity and the Nature Conservancy have added minimums — after early marketing deals ended up generating less than fund raisers thought the charities should.

Jane Emerson, Habitat’s director of corporate programs, recalls one company, which she declines to name, that paid a five-figure fee to use the charity’s name. “The partnership garnered much more attention than the company deserved for that amount.

“It’s been quite an education to learn to enter these relationships for the highest possible return,” Ms. Emerson says. Habitat for Humanity, she adds, now charges a minimum $100,000 for any marketing deal with a company.

Figure out costs. In setting minimums — and in learning how to determine the value of the individual benefits that charities offer companies in such deals — the first step is to figure out how much it actually costs to provide each benefit, says Lynn Badura, corporate-projects director at the National Kidney Foundation.

The New York charity raises $50-million annually, mostly from a series of educational videotapes, pamphlets, and other programs for patients and medical professionals about kidney disease and treatment. Pharmaceutical and other companies pay to advertise in the materials.

Ms. Badura says that she has learned to figure out exactly how much it costs her charity to offer a benefit, whether it’s adding a company’s name and logo to a videotape or holding an educational meeting for medical professionals where companies can exhibit products and showcase services to potential customers.

“We go through and quantify each entitlement, so we know exactly how much it costs us,” says Ms. Badura. “Then we add an administrative fee to cover our management and overhead costs. The key is knowing what it costs you to fulfill the arrangement and what your overhead is.” With that information, she says, charities are less likely to undervalue the benefits they offer to corporations.

“Companies appreciate the information too,” she adds. “We’re not hiding anything, and we share that information with them.”

Seek resources other than money. Money is not the only thing charities get in marketing deals with companies. They often receive access to corporate facilities, advice from business executives on management and other issues, and introductions to other companies.

But most valuable, according to many charities, is the chance to reach new audiences that come with well-publicized promotions.

The American Heart Association has a licensing agreement with the Healthy Choice brand of products, which is owned by ConAgra, the food-manufacturing company. In addition to paying to use the charity’s name on certain products, the company is spending more than $1-million for a year’s worth of daily advertisements in The Wall Street Journal.

While the ads bear the company logo, they are used by the American Heart Association to publicize any health issue it wishes. The ads feature exercise and diet tips, as well as medical information. “Sudden cardiac death occurs 700 to 1,000 times a day in the U.S.,” reads one ad designed to encourage people to get C.P.R. training.

With benefits like those, says Mary Hollock, corporate development director, “we would do it even without the money.”

Team up with other charities. Small non-profit groups that don’t have much to offer companies in the way of large numbers of potential customers can sometimes appeal to corporate marketers by joining together.

For example, 33 symphony orchestras in large cities created a national network called TOPS, which stands for the Orchestra Partnership.

The network allows fund raisers to appeal to big national corporations that are interested in reaching symphony goers, a highly educated and affluent group of consumers.

Five years after forming the network, 23 of the orchestras entered a contract with the financial institution First USA, in which the company markets its credit card to about three million of the symphonies’ donors and ticket buyers.

Under the contract, the company pays $1 to the network each time a symphony goer opens a new credit-card account, another $1 if the account is renewed, and an additional 0.5 per cent of each charge made by an orchestra patron.

So far, the deal has generated more than $2-million for the orchestras.

Avoid dependence on marketing deals. Income from marketing deals is “volatile,” says Kathy Super, director of development at Second Harvest, the national food-bank network, which is based in Chicago. Companies, she notes, often abruptly terminate promotions.

“You need to be conservative about relying too heavily on cause-related marketing,” she says. “It’s better to think of it as money for capital needs rather than building up staff.”

At the Nature Conservancy, vice-president for corporate programs Amy Longsworth says that marketing deals with companies generated nearly $5-million last year, just 1 per cent of what the charity raised in outright contributions.

While Ms. Longsworth hopes that such income will keep growing, she says she would become worried if it grew to being worth any more than 50 per cent of the total raised in private contributions.

“It’s healthy that it’s not our major source of support,” she says.

Marketing income, she adds, is “falsely seductive. Let’s face it, marketing relationships only have legs for a few years.”