A critical examination of donations and sponsorships

The words donation and sponsorship are often used in the same context to describe funds people receive as gifts. Donation and sponsorship are, however, two completely different concepts in the world of fund-raising. As a business major, I have always been concerned about how loosely firms and the media use these two words in relation to financial support given to artistes and sports personalities in particular.

In Dominica there is a long list of organizations that are eligible for tax exemptions with respect to Value Added Tax (VAT). The list includes about 46 organizations. There is also a more concise list approved for income tax deductions. Readers would note that if you give donations to some organizations you can claim tax exceptions on both income tax and VAT. Why? I am not sure.

For donations to the Carnival Organizing Committee, however, amounts must be valued at $1000-$20,000 before donors can benefit from tax exemptions. For many years I have heard the call from quite a few organizations and individuals for a policy where firms can benefit from donations made to sportsmen and sporting organizations. Yet this has not been done; probably the argument may be that the Dominica Lotteries Commission is the place where such requests for donations should be channeled.

Nonetheless, artistes in particular seem to be exploited as far as the use of donations /sponsorships are concerned. We define donations as contributions made by individuals/ companies/ trusts/ foundations for specific development projects for charitable reasons whereas sponsorships are obtained from a company's marketing department as marketing expenditure; therefore, they are not really gifts and are not eligible for tax rebate. But a business that assists a group with money or a product has the right to advertise the product.

Many scholars of marketing such as Keller Kotler are in total agreement that only firms who make donations have a right to tax rebates as they do so without fanfare or advertisement. But the company that has sponsored an event should not be eligible as it has used this said gift, cash or kind, to also advertise and promote its business and products which sometimes leads to increases in sales through greater visibility.

Therefore, how does one explain the current practice in Dominica where companies claim to sponsor and on that premise claim tax exemptions? What makes it even more ridiculous is that companies prey on the poverty and depravity of these artistes or sportsmen by having them parade on the newspapers or the visual media for as little as $300. The great deception is that when the amount is that small they never tell the media of the amount so the public is left with the impression that a sizeable sum is given and consequently that affects the artiste's ability to get other much-needed assistance after being paraded by the media on behalf of the company who made the first donation.

My research also revealed that some of the marketing departments of these companies write their own stories and submit, or pay for, media exposure parading as 'good corporate citizens'. So, then if they are (and, yes, they may be) how do we refer to the many individuals and the few companies who still adhere to the biblical and Christian principle of " freely give, freely receive" or that 'the right hand must not know what the left hand does'?

Don't get me wrong; I am a student of business so I understand the power of advertising, publicity and using artistes and sporting personalities on billboards and on products or the principle of giving back to a community. So, beggars are no choosers and recipients of money should be thankful and never be ungrateful no matter how small the sum. However, this should not be done at the expense or the exploitation of the artistes. The calls, the walking, begging and then the sponsorship of $300 and a camera in your face! There is something wrong, immoral and ridiculous about this and it must be exposed.

Just as there is a range for tax exceptions for donations to the Carnival Organizing Committee the same should apply to companies who give sponsorship /donations before they benefit from publicity or media coverage. Really media houses should not be used when companies provide sponsorship of less than say $1000. And the Inland Revenue Department should reprimand and even expose those companies who have already gotten their monies worth through advertising and still claim tax exemptions.

In closing I would like to thank all companies and individuals who have assisted me, my estate or any other artiste and expect nothing in return. Great is, or will be, your reward.