Cause sponsorship and COVID-19: From the what to the why
COVID-19 has had a unique and arguably profound effect on cause sponsorship in the Canadian market. The effects have been immediate and possibly long-lasting. Most notable is the overall compression of the giver and recipient profile.
Market overview
Overall, the trend seems to suggest a downturn in corporate giving. One in five organizations have either suspended operations or stopped charitable donation programs altogether as a direct result of pandemic-related effects on their revenue. In turn, this is impacting recipient revenue by an average of 30% across the space. While actual numbers are down, individual and corporate level interest remains buoyant, particularly as it relates to local and support-based causes, which saw a spike of 200% in a few specific categories.
Interest and a willingness to support charities however is impacted by an ever-growing angst about personal wealth and the financial health and wellbeing of individual households and their immediate families. When polled by IMI, nearly half of polled Canadians indicated that they were concerned about their financial status, with almost a quarter of those surveyed saying that they were severely concerned.
Market compression
The overall effect of COVID-19 is a compression of both the giver and recipient segments. With business, particularly in hard-hit segments such as hospitality, food service, travel and others seeing a critical decline, the number of businesses who are both able and willing to maintain contributions has dramatically shrunk. Some businesses, such as telecommunications, banking, technology and online retail giants are seeing huge growth as people shift activities such as work, study, shopping and socializing from home.
Consequently, because of this prosperity, companies who are faring well are investing more into community relations and corporate giving programs as a means to offset any potential backlash against perceived profiteering during the pandemic. For example, Lululemon, which has seen a big uptick in sales as people switch to more comfortable attire while working from home, is investing $75M in community wellness programs.
One of the effects of a compressed giver market is a compressed recipient market. While one can argue that there isn’t necessarily less money to distribute, the reality is that money is in the hands of fewer organizations than before, which means fewer recipients are benefitting. In addition, one can argue that these donors have a preference for larger, more recognizable, more marketing-savvy recipients. With community engagement mandates, the more obvious choice of recipient would be recognized brands with excellent community communication plans already in place. Niche causes may be less likely to receive this support in these instances.
Market reprioritization
With a compressed market, the overall priorities for cause sponsorship are changing. Traditionally, corporate giving was done to improve brand perception, attract new customers and increase employee satisfaction. In the case of more niche charities, often sponsorship was due to an employee or team’s personal association with a particular cause or organization. As giver mandates change to reflect communications and perception needs, so too does the reasoning behind activities. More prominent are needs that address brand perception over and above things like customer attraction or employee satisfaction. While the latter doesn’t necessarily become moot, we would argue that they are deprioritized. Consequently, recipients are discovering a need to pivot their donor benefits and messaging to reflect this type of mandate.
From the what to the why
Because COVID-19 has restricted traditional event sponsorship revenue, the market is seeing an overall shift from tactical priorities to a greater alignment of purpose between corporate giving and the recipients’ overall mandates. If previously, a business would, for example, sponsor a golf tournament -- which is effectively donating money to an event that has the benefit of supporting a cause -- the absence of these events has led companies to look at sponsoring the causes themselves. In many ways, that’s far more beneficial in terms of brand perception and does a lot more to raise awareness of the benefit itself. A closer alignment to the mandate has a far greater positive impact on a business. For example, in Canada, brands that specifically support mental health initiatives have seen a +9% purchase uptick since COVID began, meaning greater visibility within the cause has had a direct and immediate effect.
Of particular note, is SickKids’ collaboration with Sobeys for the GetLoud digital brand activation this year. The activation asked participants to get active by walking, running or riding in support of SickKids. As the Fuel Up Sponsor, Sobey’s activated through gift card promotions, encouraging participants to register and posting authentic organic social videos featuring SickKids Patient Ambassadors, Sobeys recipes and Our Compliments products. Unlike previous years where this was a live one-day event, because of COVID-19 restrictions, it was transformed into a month-long digitally driven activation that encouraged individual goal setting and raised over $1.6 million dollars for SickKids. Because Sobeys went all in on aligning with this new virtual event format, they were able to achieve 70% net favourable awareness as well as 56% net purchase consideration, exceeding the average on both indicators of 56% and 32% respectively. A key takeaway from consumers was that they were aware that Sobeys was supporting SickKids and children’s health.
Overall COVID-19 has impacted both the giving and receiving aspects of the cause sponsorship category. In fact, it’s changing the landscape dramatically, in ways that may permanently impact how the category will move forward. Overall market compression means that there will be fewer options for larger contributions to a shrinking recipient market. This may have a direct effect on some of the niche mandates, who may need to look elsewhere for sustainability. However, the key benefit is an overall alignment of dollar to mandate and a greater awareness of purpose.
By Alex Shifrin, Marijke Vandergrift and Dan Hunter
Alex Shifrin (President, LP/AD) and Marijke Vandergrift (Associate Director, Sponsorship, SickKids Foundation) are members of the CMA/SMCC Sponsorship Advisory Group. Dan Hunter is a guest contributor and a Partner at IMI International.
