{"id":215071,"date":"2021-03-23T13:24:00","date_gmt":"2021-03-23T17:24:00","guid":{"rendered":"https:\/\/www.lionpublishers.com\/?p=215071"},"modified":"2021-07-07T13:26:39","modified_gmt":"2021-07-07T17:26:39","slug":"sponsorship-vs-advertising-whats-the-difference-for-a-nonprofit-news-business","status":"publish","type":"post","link":"https:\/\/www.lionpublishers.com\/sponsorship-vs-advertising-whats-the-difference-for-a-nonprofit-news-business\/","title":{"rendered":"Sponsorship vs. advertising: What\u2019s the difference for a nonprofit news business?"},"content":{"rendered":"\n

A sponsorship is not the same as advertising \u2014 and if you\u2019re running a nonprofit news organization, it\u2019s important that you know the difference to avoid owing taxes or running afoul of the Internal Revenue Service (IRS).<\/p>\n\n\n\n

My disclaimer, as usual, is that I\u2019m not a lawyer, so if you are unsure whether your sponsorship revenue will pass muster with the IRS, please consult a non-profit attorney. (Note: LION members qualify for pro-bono advice from Lawyers for Reporters<\/a>).<\/p>\n\n\n\n

That said, here\u2019s what every nonprofit news leader needs to know about the difference between advertising and sponsorship in non-legal language.<\/p>\n\n\n\n

A nonprofit sponsorship is best thought of as a corporate donation.<\/strong><\/p>\n\n\n\n

The line between sponsorship and advertising can be very blurry<\/a>, but if you think of your sponsors as corporate donors, you will be on the right track.<\/p>\n\n\n\n

A sponsoring business gives your organization money because they believe in your mission. More than that, they want the wider community to know that their business believes in your mission. So you provide the business with the opportunity to be called a sponsor in your various communications, and you agree to put their logo on your materials. It\u2019s like you are saying, \u201cHey, we are partners working together to educate or support the public.\u201d<\/p>\n\n\n\n

The sponsoring business gets a charitable deduction for its sponsorship because the IRS treats it like a donation. That\u2019s good for them, but there arelimitations. For example, if a sponsoring company sells beer at your event, they still have to pay tax on the profit from those beer sales, and in most cases, they also have to subtract any profit from their charitable tax deduction.<\/p>\n\n\n\n

As for your<\/em> bottom line, the IRS rules around sponsorships are equally important.<\/strong><\/p>\n\n\n\n

That\u2019s because sponsorship revenue is tax-exempt, but advertising revenue generally is<\/em> not<\/em>, and that means (with a few, narrow exceptions<\/a>) that you\u2019d have to pay taxes on anything the IRS considers advertising, even as a nonprofit.<\/p>\n\n\n\n

If you want to avoid that tax bill, you can only identify a sponsoring business through its logo, tag line and contact information.<\/strong> You cannot <\/em>offer promotion for any of its products or services, because that counts as advertising.<\/p>\n\n\n\n

Here are a few examples of what counts as a sponsor message:<\/strong><\/p>\n\n\n\n

\u2705 We\u2019d like to thank our sponsor, Budweiser, the King of Beers.<\/p>\n\n\n\n

\u2705 Sponsored by Target. Expect More, Pay Less.<\/p>\n\n\n\n

\u2705 Brought to you by Ace Hardware, The Helpful Place.<\/p>\n\n\n\n

And here are a few promotions that cross the line into advertising:<\/strong><\/p>\n\n\n\n

\u274c Brought to you by Budweiser. Have you gotten your NBA throwback Bud yet? Time\u2019s running out!<\/p>\n\n\n\n

\u274c Sponsored by Target. Check out our Spring Sale, March 1\u201315!<\/p>\n\n\n\n

\u274c We\u2019d like to thank our sponsor, Ace Hardware. Mention us and get 15% off your next purchase.<\/p>\n\n\n\n

Still confused? Here are some rules of thumb to help you remember the difference between advertising and sponsorship.<\/p>\n\n\n\n

Advertising<\/strong><\/p>\n\n\n\n