#PRIssues: The importance of maintaining the integrity of a donation/sponsorship agreement
Ever since I helped Seven Stars with the process of securing the Twizza sponsorship, I have been contacted by a number of people who also need assistance to put together sponsorship proposals as well as to approach various organisations that can assist them with either donations or sponsorships.
Because of my experience in doing PR in the sponsorship space, I have not had a problem assisting those I can in the past.
However, as mentioned in my previous columns, there is a difference between a sponsorship and a donation.
By definition, donations are charitable in nature, and they purely benefit the organisation that has asked for the funds. A sponsorship on the other hand is a business transaction: companies put in money expecting something in return, in the form of marketing and/or revenue.
Back to the topic at hand. It is very important for organisations that ask for either a sponsorship or a donation to stick to the terms of the agreement. This includes how the money that is sponsored or donated is used.
If a donation is requested by a non-profit organisation (NGO) that looks after children for example, the running costs for that organisation would include items such as food/groceries for the children for each month, monthly utilities such as water and electricity as well as other day-to-day operational costs. The donation given to that NGO in the form of cash would then need to be used for exactly that.
This is because whether it is a sponsorship or a donation, the organisation that requested the funds will have to account either quarterly or annually in the form of receipts, invoices, banks or financial statements, to show how the money was used. That particular NGO can unfortunately not divert from the agreed terms, unless the expense is justifiable or falls into miscellaneous or unexpected costs.
It is also important for that organisation to work within the means of the available amount. Let me give you an example. When I worked at the bank, we were approached by a lady who owned an NGO. She requested funding for an initiative that she wanted to do, and the specific amount was R30,000.
The provincial leadership forum at the bank met and discussed this request, after careful consideration, and they decided to take the money from one of the divisions. She was then contacted and told that the funding has been approved.
Immediately after she was informed that her request had been approved, she changed her mind and asked for more money, and told the bank that she would rather have R100,000.
The bank told her that it did not have that kind of cash and if she chopped and changed her mind like that, then it did not want to work with her any more. She ended up not getting the R30,000 as well, because she was trying to milk the bank for more money. This told management she was greedy and saw the bank as the golden goose that keeps on laying golden eggs.
When she started asking for more, we started questioning her integrity and her intentions therefore we did not want to be associated with such a questionable character any more.
In another example, an NGO funded for a year under the bank’s CSI programme was asked for financial reports at the end of the year, including receipts outlining how the money was spent.
This was a way to account for how the money was spent for that whole year. They were supposed to produce receipts for groceries bought monthly for the 40 kids at the children’s home, but instead they produced a number of receipts from fast-food restaurants for two people who were clearly, on a continuous basis, taking each other out using the money meant to take care of the orphaned and vulnerable kids.
The following year, the bank decided not to continue funding that NGO and the people that suffered were unfortunately the children, who were supposed to be the main beneficiaries.
The moral of this story is that any organisation that asks for a donation or sponsorship from any company in the public or private sector should have a long-term vision in mind.
This vision should be to create a long-term relationship with the sponsoring organisation or the funder, by doing things right and ensuring that the relationship is mutually beneficial.
This is what makes a donor or a sponsor see the need to keep on funding that particular organisation.
Because should this not happen, donors or funders will run away and not come back again. And if, for some reason, the name or reputation of an NGO is negatively affected because of lack of proper management of finances, I can bet you that no other donor or sponsor will want to touch or be associated with your organisation again. So again, this is my friendly advice: Do the right thing and think long-term.
Disclaimer: Miranda Lusiba & STRANGÉ CONSULTING retain all title, ownership and intellectual property (IP) rights to these columns and trademarks contained in all other information and supporting documents as well. This is in accordance with the SA: Copyright Act 98 of 1978 (amended) Intellectual Property Laws Amendment Act 38 of 1997.
The moral of this story is that any organisation that asks for a donation or sponsorship from any company in the public or private sector should have a longterm vision in mind