GPSOLO September 2009
Sponsorships and Charitable-Giving Programs
How many times have you been asked by a client to sponsor a table? Or give to a charity? How many of your part-ners are being asked to do the same? Was the value of the investment commensurate with the benefits offered? Have you set the anticipated return on investment (ROI) for each dollar spent? If you answered no to one or more of these questions, it is time to get serious about the planning and execution of your sponsorship and charitable-giving poli-cies. These are, after all, turbulent economic times in which every dollar counts. Getting serious can mean making difficult choices. Firms, especially in smaller communities, tend to spend a disproportionate amount of their market-ing budgets on sponsorships. And once a charity has been sponsored, it’s hard to turn down future requests. So firms simply continue giving, adding more sponsorships each year—particularly when potential clients suggest that they’ll more strongly consider using your firm if you donate to their preferred cause.
Given such complications, you can reassure yourself that sponsoring and donating to causes are simply the right things to do. But targeting your giving to the appropriate causes, organizations, and events is an even “righter” thing to do. So how can you determine what the proper course in spending is? To answer that question, let’s address your rights as a law firm that values the importance of giving.
The right to set sponsorship guidelines that align with your mission, business strategy, and brand. Account-ing firms, corporations, and major nonprofit institutions are all exercising this right. Why? Because they have found that unless your giving is in sync with your brand, it may very well sink the impact of your dollars. Giving to all kinds of causes may feel good, but it does not reinforce who you are, support what you stand for, or bolster your reputation in the community where you operate. Without guidelines you have no spending limits.
The economy is tough, and your marketing budget is stretched tighter than ever. Sponsorship guidelines enable you to say yes or no without seeming negative toward the causes or clients you turn down. And such a reasoned re-sponse is always better than no response at all. The right to remain silent is an important legal concept, but it does not reflect well on the public reputation of your firm.
The right to establish a centralized annual sponsoring- giving budget. Establishing a healthy budget agreed on by all partners is critical to the success of a sponsorship program. Often the sponsorship budget is kept separate from the charitable-giving allocations because of tax ramifications or financial or stakeholder reporting reasons. But seeing all such activities as part of the marketing mix is a wise perspective in budgeting.
The right to negotiate contracts for a better ROI. Often an organization will ask you to support a cause, event, or conference and, in return, will list your benefits. What are you getting as an ROI? Here is where the fun begins, by identifying the benefits to the firm. Let’s separate benefits into two main categories: tangible and intangible.
Among the myriad tangible benefits, you may at first be offered a logo display, one advertisement in the pro-gram, signage, the right to distribute novelties, and five seats or tickets to the gala.
If you want more, it’s time to negotiate your requests. For one, you want to know precisely who is coming to the gala—because you want to make sure the five appropriate lawyers are in the right place at the right time, as in face-to-face with clients and prospects. Thus, you ask for a preregistration list two weeks before the gala. And what about those intangible benefits, such as being the exclusive law firm sponsor? Or being seated with the chair of the gala, who is also a potential client?
The right to set and measure ROI. Probably the most frequent question about sponsorships is how to measure ROI. Even more complicated is how to set an expected ROI.
One approach to defining ROI is to establish how sponsorships will be tracked and measured before the event. You may want to begin by orienting the lawyers attending the event—by advising them, for example, that they will need to report on specific metrics such as number of quality attendees, number of leads, potential new matters and increased market presence, and whether the event is worth supporting next year.
There are both complex and simple valuation techniques you might implement. A simple example is using an ABC method to place a value on a sponsorship, such as this: A = a top-notch ROI, B = a fair ROI, and C = a poor ROI. They all lead to quantitative measurement requiring some qualitative judgment about how valuable the spon-sorship is and whether or not to renew it next year.
The right to renew or sunset. It is imperative to review each sponsorship or charitable gift and place a value on it. Some sponsorship investments are going to receive a C rating. This means that your choice next time is whether to negotiate for smarter benefits or decide not to renew. Before you use the hatchet, though, take into account the cost of not sponsoring. Would you lose a key client? Would it damage your reputation? If the answer is yes, seri-ously think about sunsetting out—as in, a gradual, phased decrease in your sponsorship support—rather than making an abrupt exit. Suppose, for example, you have been sponsoring the Timbuktu Bar Association (TBA) for 10 years at a cost of $20,000 per year. It all started when your number-one client became the president of the TBA. But as time passed after your client’s term ended, your firm continued to give. None of your partners have remained a member, no clients are still active, and the events are too far away to attend. Still, as a legacy, your firm leader felt it the right thing to continue because the TBA counted on your financial support. Kindhearted? Yes. Smart sponsor-ing? No!
Sunsetting means to exit slowly, with a defined plan so that neither your firm’s brand or reputation nor the organization you have sponsored are damaged. Smart sunsetting involves strategies that lead to lasting goodwill and relationships. There are a number of techniques. Returning to the TBA, you decide to do this: First, you inform the TBA that this will be your final year as a sponsor at the $20,000 level, and that next year you will offer $10,000, and the following, final year, $5,000. Second, you offer to help the TBA find better-aligned sponsors through your connections in Timbuktu.
Well-done sponsorships lead to long-lasting relationships. Sunsetting is an effective way to maintain your brand, your reputation, your goodwill, and your clients. Do not take it lightly.
The right to sponsor wisely and reap higher ROI. Whether you are a large or small firm, investing your sponsorship dollars in a way that maximizes the return on them and optimizes your investments is just smart management. Especially in a tight economy, you will want to ensure that your firm is focused on sponsoring causes that enhance your brand and reputation and maximize your potential for sustainable and new client relations. Following the rights outlined here should help significantly the next time several organizations knock on your office door at once.
- This article is an abridged and edited version of one that originally appeared on page 53 of Law Practice, April/May 2009 (35:3).
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Ellen S. Hattenbach is principal of eHattenbach Consulting, based in Deerfield, Illinois. She may be reached at firstname.lastname@example.org.