Increasing your income, part 3: Sponsorship

This resource is part of our ‘Increasing your income’ guidance, which looks at ways to find and grow sustainable and diverse income for your group. It will focus on how to build successful corporate sponsorships to help put your group on a secure, long term financial footing.

Sponsorships have some things in common with Friends schemes and some of the themes and ideas in this guidance are similar to those in our Increasing your income: Friends scheme. However, whilst there is cross over, there are important differences too and should be viewed and approached separately.

Arranging sponsorship with a local business can be a great way to increase your income. In the most basic sense a sponsorship fee is money in your account but a good sponsor relationship could also help save money, provide practical advice and help to grow your audiences and membership.

The key to any good sponsorship relationship is that it is the right fit and genuinely beneficial for both parties. It is easy to take a sweeping approach and ask as many local business as possible. This can take a bit of time for potentially low rewards and is not always sustainable – a local business may take a punt but if it is not right for them they will not renew the agreement. So it is worth taking some time to think about the right kind of sponsor and what you have to offer them.

What does the sponsor want and what can you offer?

Publicity: a key thing for any sponsor will be raising their profile with your members and audience and being able to access them with information and offers about their business. So unless your members and audience are likely to spend money with your sponsor it probably won’t work. If you think your members and audience would be interested in and likely to spend money with a potential sponsor then some things you could offer the sponsor are:

• Free or discounted advertising in your concert programme or website
• A short article in your concert programme or on your website
• Their logo on your concert poster
• A namecheck whenever you promote your group to others – on social media, to the press, in your newsletters, etc.

Benefits for their employees: Sponsorship is not just about marketing opportunities. Health and happiness in the work place is a hot topic and employers are often keen to offer benefits to their employees in this area. There are lots of ways music groups can help with this. This is good for the sponsor, can help boost your audience and membership and is a great way to make sponsorship more than a simple commercial agreement.

• Free lunchtime music workshops for employees – singing at lunchtime makes for a productive afternoon
• Free or discounted concert tickets
• Reserved seating at concerts
• Discounted or free memberships
• VIP receptions, before/during/after concerts
• Free CDs or other promotional material
• The opportunity to book your group (or members of your group) to perform for them

What can they offer you? A sponsorship agreement should be two ways.  There are plenty of things businesses can offer you, your members and your audiences that will also raise their profile.

• Donate prizes for a raffle
• Run a competition/prize draw at your event
• Offer a voucher or discount for their business with every ticket
• Donate their time or expertise – a local cafe could provide discounted refreshments in exchange for publicity for example
• Offer vouchers to your members for their business. A local pizza restaurant could give you 10 vouchers which you could give away as prizes to members

What packages should you offer and how much to charge

The most common approach is to have a standard sponsorship package with set benefits and costs. This can be useful and often potential sponsors will like a clear offer with costs and benefits well defined. This doesn’t have to be publically available - but it is useful to have a clear idea and a well presented document to send to any potential sponsors. 

Sponsors will have different aims so having several types of package can be good. Yearly agreements – possibly with two or three different levels (e.g. Gold and Silver sponsor) can be a good way of building in options to suit different aims.

Your packages don’t have to be set in stone, you could also offer:

• One off event sponsorship  e.g. Come and Sing Play day sponsored by …
• Sponsorship for a specific part of your event - a local business could sponsor the refreshment bar or raffle for example.
• Sponsor a performer – a local business could sponsor a particular member of your group by matching their membership fee – they would get their name in the programme (and website) in return.

Maintaining a flexible approach and tailoring packages to individuals need is a good idea too. There is nothing to stop you having four sponsors (for example) with four bespoke packages.

Cost: if you are designing set packages think about how much they are worth to a sponsor, not how much you want to raise, before setting a price. Again, flexibility is important here a bespoke package should have a bespoke price. Think about offering discounts in exchange for benefits they can offer you and your members. Be prepared to negotiate too - but always keep in mind what you realistically can offer and what you’d like in return.

Approaching potential sponsors

The personal approach is very important, so when approaching a local business for sponsorship try to do it in person.

• Consider offering potential sponsors free tickets to a concert before they make up their mind, so that they can see exactly what it is that you do.
• Make use of any existing connections – think about where your members work – it can be a lot easier to speak to the right person if you already have an ‘in’.
• Ask them for feedback if they turn your request down – what could you have done differently to make them change their minds?

Finally, remember that the key ingredient of successful ongoing sponsorship is the personal relationship you build up. Acknowledge your sponsor’s support as often as you can – social media is a great way of doing this. Promote them and support their business in return.

Keep in touch with them with regular news from your group, and if possible include them in any development plans as they may be able to make a contribution.

Sponsorship and tax implications

VAT: Sponsorship is business income.  If you group is VAT registered then you will need to charge VAT on any sponsorship agreements you enter into – this should be charged at the standard rate of 20%. If you group is not registered for VAT then you do not need to charge VAT.

If your group is close to the VAT registration threshold, then sponsorship income may have VAT and also direct tax implications. 

What does being registered for VAT mean? Organisations , including charities, with an income over a certain amount (known as the VAT threshold) have to register for VAT. AT the time of writing (2023) the threshold was £85,000/years. This changes most years in April. If you income is under this then you do not have to register – but can register voluntarily. 

If you want to find out more you can read our VAT guidance (including details about a free initial VAT consultation with one of our Corporate members).

Gift aid: Sponsorship is different to a donation, as the sponsor is receiving something in return (advertising, publicity, free tickets). If the sponsor is a company, it won’t be possible to claim Gift Aid. Similarly, if the sponsor is an individual who is promoting their own business or brand.

But if the sponsor is an individual and is receiving nothing more than a simple acknowledgment of their donation in a programme, it may be possible to claim Gift Aid on the income received. In this case, it would be best to avoid the word using the word ‘sponsor’ and refer to them as a donor instead.

Further Reading

• Increasing your Income overview
• Increasing your income, part 1: Membership subscriptions
• Increasing your income, part 2: Ticket sales and events income
• Increasing your income, part 4: Friends schemes
• Increasing your income, part 5: Donations, fundraising events and sponsored challenges

We hope you find this Making Music resource useful. If you have any comments or suggestions about the guidance please contact us. Whilst every effort is made to ensure that the content of this guidance is accurate and up to date, Making Music do not warrant, nor accept any liability or responsibility for the completeness or accuracy of the content, or for any loss which may arise from reliance on the information contained in it.