Both a business sponsor and a business stakeholder provide some level of support to an organization. The support may include money, time, advice or other valuable resources that the organization needs to operate. Both have a stake or interest in the organization’s success. Though similar, sponsors and stakeholders have different motivations and play distinct roles.
A sponsor is an entity or person who donates valuable resources to another entity. A business sponsor might donate equipment, money, or even asking the company’s employees to lend a helping hand to another organization. The recipient of the assistance is usually a charity or non-profit organization. Some business sponsors help by simply vouching for the other organization. For instance, when a well-known and respected corporation sponsors a charitable event, having that corporation as a major contributor might encourage more people to donate to the cause and also attract more attendees.
As the name states a stakeholder has some type of a direct stake in the performance of a company. Stakeholders include employees, managers, unions, shareholders, suppliers and banks that lend money to the organization. A stakeholder provides something of value or use to the business in exchange for something else of value. For instance, employees trade their work for a salary and shareholders provide capital to the business in exchange for stock that might grow in value over time.
The Main Difference
The main difference between a sponsor and stakeholder is that one party donates resources and does not expect a financial return while the other does expect some type of return at some point in the future. The sponsor’s contribution is a gift while the stakeholder’s contribution is an investment. However, in some cases a sponsorship does benefit the business sponsor if the non-profit advertises the relationship to the public.
Whether a contributor to an organization is a sponsor or stakeholder it is important to form a written agreement or receipt to establish the terms of the arrangement and eliminate confusion regarding the relationship between the two parties. For instance, most companies require workers to sign employee contracts and before working with a supplier the business first signs a vendor credit agreement. A sponsorship agreement outlines the purpose of the contribution and how the company’s name should be used in communications (if applicable). At the minimum, the written agreement should outline the type of resource that the sponsor or stakeholder will provide to the organization, its estimated value and whether or not the giver requires something in return.
- Jupiterimages/Comstock/Getty Images