Sponsorships and Underwriting Campaigns: Would You Please Fund Our…?

Sponsorships and underwriting are different labels for basically the same thing: funding donated for the support of a project, program, event, initiative, activity, or even a salary. In general, foundations are identified as underwriters and corporations as sponsors. Individuals can be either, but in most instances underwriters and sponsors will be foundations and corporations.

The amount of publicity and recognition also helps answer the question of whether a funder is an underwriter or a sponsor. The word sponsor connotes a higher level of participation and consequently higher visibility than does underwriter. If one of the benefits a funder is seeking in exchange for support is publicity and recognition, then that funder is best identified as a sponsor. In very low visibility situations such as the funding of a position -an executive director, for instance—we would probably refer to the donor as an underwriter, even if the donor was a corporation. In the end it doesn’t really matter whether you call a funding opportunity underwriting or sponsorship. Do what seems natural, what is usual within your community, and always do what the funder wants. If a corporation would rather be named an underwriter than a sponsor, then it’s an underwriter.

For the purposes of this discussion, I will use the labels sponsor and sponsorship in instances where we could be talking about either a corporation or foundation. Only when I wish to restrict the application of what I am saying to a foundation will I use the labels underwriter and underwriting.

“Package” Your Programs, Services And Events

Sponsorship, especially corporate sponsorship, is a relatively recent fund-raising strategy compared to other fund-raising endeavors. A sponsorship campaign is like a capital campaign, for example, in that it raises money for a specific purpose. Unlike a capital campaign, however, the money raised is not used to purchase an asset, but rather to cover an expense. Like a capital campaign, sponsorships can provide naming opportunities—the ABC Corporation Lecture Series or the XYZ, Inc. Neighborhood Improvement Program, for instance. Sponsorship opportunities such as these often grow out of an organization’s annual budgeting process, allowing it to pay for things it would have done even if a sponsor hadn’t risen to the bait of a naming opportunity. These sponsorships permit an organization to package a need, in effect, as a means of boosting its annual support. The idea is to give greater credit and visibility to a sponsor in exchange for an increased contribution. A corporation will look to a sponsorship with a non-profit organization as the means for the corporation to:

  • Enhance its corporate image
  • Promote internal good will among its employees
  • Reach high caliber volunteers and donors, many of whom are leaders in their professions or corporate executives
  • Foster the association between its customers and the sponsored organization
  • Create general public awareness and excitement

Be Creative And Boost Your Annual Fund Potential

At one end of what I call the sponsorship spectrum are the donors who provide an organization’s bedrock annual support. It makes sense to give these donors as much recognition and credit as possible. If their gifts are of a size to warrant, you can even specify that certain programs, efforts, or activities have been made possible because of their support. Once an organization has made a practice of linking gifts from certain donors to certain of its activities, the next step is to offer those donors sponsorships. Ideally, a single donor becomes the sole sponsor of an activity. The activity may be new, or already in existence. The sponsor gets the exclusive benefit of associating its name with the event or program. Often a sponsor’s name can become synonymous with an event. When I say Thanksgiving Day parade, I bet the name Macy’s jumps to mind. In a survey some years back, 97 percent of the participants made that association.

The beauty of funding something in this way is that you can ask for more money for a sponsorship than the donor was contributing to your annual fund-raising campaign. You can also ratchet up the cost of the sponsorship every few years: One that was available for $10,000 three or four years ago now requires a $15,000 contribution.

At the other end of the sponsorship spectrum are the companies and individuals who have shown no interest in your organization in the past. They may even have turned down earlier solicitations. A named sponsorship opportunity that provides high visibility can be just the ticket to drawing in a prospect who has previously been reluctant to give.

Be Alert For Opportunities To Obtain
New Or Increased Funding

  1. Examine, analyze and investigate at all times all that you do in your organization to know what will appeal to prospective sponsors and underwriters
  2. Advertise and promote the programs and services you have available for sponsorship and underwriting through personal contacts, newsletters, letters of inquiry, etc.
  3. Identify prospects and their products and services which could have a mutually beneficial connection to your organization
  4. Develop, with the assistance of all appropriate staff, the necessary elements for preparing proposals to prospects and seek trustee involvement through their peer contacts and presentations of proposals
  5. Establish with the sponsor or underwriter the desired goals and objectives of the proposed association
  6. Develop with each sponsor or underwriter a detailed and realistic action plan and calendar with clearly defined responsibilities
  7. Be responsible for the full “servicing” of the sponsorship or underwriting program, including employing all necessary organization staff support and participation. You must do everything you said you would do. The number of times and where the sponsor’s logo is to publicly appear, entertainment opportunities, access to your leadership, etc., and other promises and agreements, must be fulfilled.
  8. Evaluate ongoing and completed sponsorships and underwriting programs to the satisfaction of the donors to maintain and continue support and to perfect models for future proposals and presentations

The first step in seeking sponsorships is to identify likely projects, programs, events, initiatives, and activities. I can’t think of an organization that would not have some underwriting or sponsorship opportunities. Remember, creating a sponsorship often requires nothing more than a rethinking of the means by which you fund something. Nearly any discrete endeavor can be pulled from a general budget and packaged, such as underwriting six months of a scoutmaster?s service to 20 inner-city children, three months of computer training for a welfare mother to help prepare her for employment, or sponsor an education outreach program enriching the lives of 100 students, etc. A “grass-roots” organization sheltering abused children could have donors sponsor a child or underwrite the cost of a social worker’s service for a year, etc.

Finding the best opportunities for sponsorship campaigns requires fund-raisers to “mine” their organizations by looking hard at what activities are planned. Fund-raisers should meet regularly with other staff to keep abreast of developments and to solicit their opinions about which activities might be viable for sponsorship. Once a sponsorship opportunity has been identified, a full-fledged proposal needs to be developed. This should include a budget, a case for giving which shows how the community and the organization will benefit, and a complete explanation of how the sponsor will benefit from the relationship.

Next comes the rating and evaluating of prospects. The goal is to narrow the field to the single best candidate and a handful of backups. A standing sponsorship committee of the board of trustees can be a great aid here and provide better leadership of this task than a committee formed separately for each sponsorship project.

Committee members, other fund-raisers, and organization management should keep well informed about both the kinds of endeavors that area foundations are willing to underwrite and which corporations are likely to be attracted to a sponsorship opportunity. That means staying on top of local and national business news. A firm that may have shown no past interest in supporting your organization (or any other, for that matter) can suddenly find itself needing the recognition and publicity a sponsorship opportunity can deliver. A marketing or public relations agency can be a useful advisor for identifying potential sponsors, and an organization should try to involve such a firm on a volunteer basis or perhaps even hire such services.

Once a sponsorship opportunity has been identified, a general proposal has been developed, and a candidate or candidates have been identified, the proposal must be tailored to fit each prospective donor. In this age of desktop publishing it is easy to produce a professional-looking prospectus targeted to each sponsorship candidate.

In general, sponsorship solicitations should be sequential. Only rarely, if ever, would you offer a sponsorship opportunity to two or more prospects at the same time. The danger is that more than one will accept. However, if the sponsorship is one of a number of similar opportunities, then one prospective sponsor may be able to be moved. If the organization is offering a unique named opportunity, then having to go back to a prospect who is in the process of accepting the offer and say you gave it to someone else has the potential for permanently damaging that relationship.

However, each sponsorship opportunity is its own campaign, and you can undertake several sponsorship campaigns simultaneously with other fund-raising campaigns.

You would do well to allow as much time as possible for a sponsorship campaign. Even a turndown takes time, and a sponsored endeavor usually has a “drop-dead” date—the point after which it becomes impossible to recognize and publicize a donation and include the donor in sponsorship publications such as brochures, schedules, and programs and in activities such as dinners, cocktail parties, and openings. Fund-raisers need to plan backward from the drop-dead date in order to allow time to solicit more than one potential sponsor if that becomes necessary.

Sponsorship campaigns have no ideal length, and because they are conducted behind the scenes, they can go on for as long as it takes to elicit a positive response, or until the drop-dead date has passed. The invisibility of this kind of campaign means that failure causes little real damage, other than the missing funding. Since failure in a sponsorship campaign is “private” and there is no hard-and-fast time frame beyond the final drop-dead date, organizations need to be very careful about not letting sponsorship opportunities slip away. Sponsorships need to be pursued with the same vigor as annual, endowment, and capital campaigns.

Don’t “Give Away The Store”

Perhaps the most common mistake made in a sponsorship campaign is to let ancillary expenses rise by making overly generous commitments to the sponsor. Corporate sponsors are particularly likely to suggest expenses which are covered by the sponsor’s gift but which are not part of the sponsored endeavor’s regular budget. Items which the sponsor may ask for as part of its benefit package can include, but are not restricted to:

  1. Advertising
  2. Parties and other free entertainment for customers, clients, and employees
  3. Hundreds of free tickets, which could otherwise be sold, to an event
  4. Special publications, posters, and other printed materials
  5. Elaborate press functions

There is a tendency on the part of fund-raisers to promise special considerations to sponsors. That inclination must be resisted, but with as much tact as possible. Out-of-pocket expenses can destroy the value of a sponsorship donation if they are allowed to get out of hand.

A sponsored endeavor that does not meet the organization’s or the sponsor’s expectations poses another potential danger. Neither foundations, nor corporations, nor individuals want to have their names attached to negative publicity. Controversial endeavors do not make good sponsorship opportunities. Be sure there is no hidden potential for controversy in those activities for which you seek sponsorship.

Determining What To Offer Sponsors Is A Team Effort

In my experience, the biggest problem fund-raisers are likely to encounter with sponsorships is that there is always somebody back at the shop—a staff member or trustee—who objects strenuously (and, to my mind, often unreasonably) to some of the benefits given in exchange for sponsorship. The impact of these objections can be diminished by having the key players clearly define in advance what courtesies and considerations will be extended to a sponsor. If a non-profit organization earns a portion of its income, then the people running the marketing operation need to be apprised of and in agreement with just how much of what they sell is—from their point of view—going to be “given away” to a sponsor. Good relations between an organization’s fund-raisers and marketers are very important. They need to work together as a team to produce the income which is their common goal.

Most Sponsorships Are Philanthropy-Driven

It is important to remember that all donations, including sponsorships, are basically philanthropic in nature. What we do to recognize a sponsor’s contribution is just that—recognition. Be careful how you tout “market value” of sponsorship benefits. An organization should not look at a sponsorship as a quid pro quo arrangement with each contributed dollar “buying” additional benefit for the sponsor. All but the most inexperienced sponsors know they are making a donation. Don’t work so hard to convince sponsors of the value they will receive that they cease to see their sponsorship as a philanthropic endeavor.

An organization mounts a sponsorship campaign in order to increase its donated income. Sponsorships are an effective way both of enlarging existing annual gifts and of drawing in new corporate donors. There are secondary benefits as well. One is the credibility to be gained when a company or foundation allows its name to be associated with that of the organization. This quite plainly and simply amounts to an endorsement, and the bigger the company or more highly regarded the foundation, the greater the impact of that endorsement. An organization establishes a richer, more complex relationship with a donor who is also a sponsor. In the case of corporate sponsors, this often leads middle and upper-level corporate management to deeper involvement with the organization, resulting in the expansion of its volunteer base and the development of potential leaders for its fund-raising campaigns.

Often, one of the benefits extended to sponsors is a reception or entertainment event. When this happens the organization’s trustees, administrators, and fund-raisers have the opportunity to rub shoulders with corporate executives and other invited guests. It is a chance to meet and get the ears of some of a community’s most important people. Suddenly, you are sitting at a table with the company’s CEO and spouse or the public relations VP and spouse, and that is a true networking opportunity.

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  1. I work for a NP that accepts “underwriting” donations from chapter volunteers that come to a conference as a way to offset the costs incurred to produce the conference. Is it kosher to give participants tax receipts for their donation even though they are technically the recipient of “benefits” by way of accommodation and meals?

  2. For a smaller non-profit like a senior center, we often hold events and fundraisers utilizing sponsors to cover the costs. Where would the ethical guideline be when sponsorships greatly exceed the costs to put on the event. Is it assumed that left over funds will be contributed to the charity or is there an expectation that the event was the cause of sponsorship and the funds would be used primarily on that event.

    • Jeff,
      You should attach a suggested asking for each sponsorship based on the best estimate you can come up with regarding actual costs. I know this is not so easy due to the fixed costs of staff management, utilities, etc., but the contribution amount should be reasonably in line with the item to be sponsored/underwritten.

      Why such an exacting way of ascribing a donation amount to an program, service or item, is that sponsors, for the most part, give such money in a mostly symbolic way. That is, when you cannot provide a detailed expense accounting, the sponsors recognize that they are funding the organization generally because they care, thus will not be demanding to know to the penny how a given amount fits with a given sponsorship opportunity.

      With all of that general explanation, you can certainly divert unused funds to other of your operations, especially to build up a cash balance for future needs—both programmed and unexpected.

      Just do not seriously inflate the asking each time for each item to the point it would be obvious there would be unused funds to the degree that a sponsor would ask about it in the first place, and at worst, ask for the overrun.

      It might be worthwhile once again to read my article above:

    • Jeff,

      I would add to what Tony recommends: I always added a sentence such as this when asking for sponsorships verbally or in writing. “Your sponsorship will aid in creating and producing (event) and the work of (organizaton).”

  3. I own an event design company. I am hosting a charity event for a non-profit organization on a volunteer basis (I am NOT affliated with the NPO). My committee and I are starting to raise funds for the event (a gala). Funds need to be raised to cover the costs of the event (catering, entertainment, etc). My question is to whom do sponsors make their payment? While all donations and event profits will go directly to the NPO, event sponsors’ funds are needed to pay for the various vendors. How is this situation handled?

    • Joi,
      From this literal and figurative distance from you, please understand that in no way do I dispute or otherwise question your motives. And that you are “public” here with your comments and question, makes clear your good motives.

      But, from my point-of-view I question and suggest a number of things—some of which may be already settled, or in the process.

      — The benefiting charity must itself fully approve of what you intend to do in every possible way, especially to agree to the expense budget relative to gross income projections, so as to achieve a net proceeds donation worthwhile to the time, effort and expense expended.

      The event must not be conducted with the non-profit just standing by. Its reputation, as well is at stake, regarding how the function is presented, and certainly that it makes money for that non-profit.

      — If all things are correctly in place, your committee can certainly raise funds, but they will only be tax-deductible donations when the checks are made out to the non-profit. And care should be taken that your solicitations do not cross wires with those of the NP itself as it conducts its regular campaigns—which is another reason why the NP must be intimately involved.

      — The money donated to the event on behalf of the NP must be carefully portioned out to fair and reasonable expenses, again known to, and approved by, the receiving NP.

      — To repeat, the sponsors must make their payments directly to the NP if those sponsors expect to gain via tax-deduction and/or business expense declarations to the IRS.

      — Though you are no doubt steeped in event planning experience, nonetheless, I urge that you read and follow what I assert and suggest in my article, link following.

      The event must make enough money to justify the effort and cost. Not only is it critically important to prepare a sensible and defensible expense budget, but it is even obviously far more important to know fully and confidently what and where the paying patron base may be—and to have some degree of certainty that there will be contributing sponsors.

      Your Organization’s Next Special Event: “Fund-Raiser” Or “Friend-Raiser?”

      Again, perhaps all is in order. I only wanted to caution that an otherwise well-intended and significant gesture on your part is not being conducted in a vacuum of sorts, with the intended recipient NP standing off to the side not deeply involved as it must be.

      • Thank you Tony for your reply. Yes, the NP has approved the event and is continuously updated of all developments and potential sponsors, so as not to overlap. They also must approve all materials that are released to the public with their likeness on it. After further investigating though, I believe that my original concern is actually defined as event underwriting. That way they get all the tax benefits for their generosity and we can still have our costs covered. Plus, we’ve decided to add additional categories to our sponsorship package for the more expensive event cost (band sponsor, media sponsor, decor sponsor, etc.)

        Thank you again.

  4. Hello there – we are a new foundation and we receive most of our funds from corporations. Much of the work we do falls into the category of sponsored projects. I am unclear what the requirements for donor acknowledgment are for sponsored projects (if indeed the sponsors are donors) and what we need to be doing to distinguish funds coming in as gifts or sponsored projects… are there tax advantages to us of one or the other, and how do we comply with any legal requirements?

    Thank you!

    • Deirdre,
      The donor corporation/business will itself know what to do regarding how it handles the money given to you.

      Internally, the donor will claim to the IRS what it knows to be a charitable donation or a business expense; or a partial of each. It will depend on what the donor received from you, if anything, in the form of tangible advertising costs, complimentary tickets, receptions, etc. — “market value.”

      All you need do is to acknowledge the total contribution, and if any part of those funds have an explicit market value of what they received, then you let them know that.

      More often than not, in such instances, we received two checks from corporate donors. One being their charitable donation, the other in payment for tickets or other goods and services.

      Quite often I knew the donated funds came from the corporation’s charitable foundation, while the cost of the goods and services we provided were absorbed by the corporation’s advertising, PR, Community Relations, etc., budgets. But, we had nothing whatever to do with that kind of internal-to-them apportioning of the total money given to us.

      Your organization does not pay taxes. The main point is for you to log in your books what is, in fact, a clear charitable donation. Should you be reimbursed for expenses due to tickets given, receptions paid for, etc., then you simply have those expenses offset by their payments.

  5. I would like to know how to answer a specific question. When a potential celebrity manager wants to know, “What is your budget for this individual’s participation in the event?” This is a charitable event with all proceeds going to support children with autism, Down Syndrome and other like diagnoses. Please answer

    • Terry,
      It appears to me that the manager/agent of a celebrity, whom you would like to engage to appear/perform at your fund-raising event, should be telling your what his client’s fee and expenses would be, or if the appearance is gratis, then let you know what, if any, expenses you will need to pay.

      The way I read your note–correct me if wrong– is that the manager/agent is asking what you think you can pay for the services of his or her client.

      If you do have an expense budget, one perhaps with a history of paying for such performers, then if that number is right for you to meet, it can be given.

      But, of course, with a very hard eye to what you spend compared to what you will net as charitable proceeds to make the fund-raising worthwhile.

      To my way of thinking, the manager/agent should himself or herself give you the total cost of bring the performer to your fund-raiser.

  6. I had a question that I was hoping you might be able to help me with. I have recently established a non-profit for educational purposes. I want to raise funding for the non-profit, but already know that I would want some of that funding to go towards expenses that might not fall under the canopy of that non-profit and I do not want to threaten the tax-exempt status of my non-profit.

    Would it be possible to raise funding for a for-profit financial servicing company, making donors aware of this, while also establishing that an overwhelming percentage of that funding will go to the non-profit, and be used for non-profit-based purposes, but that the funding must be made in this manner so that any funding, directed towards campaigns not falling under the canopy of the non-profit, will not threaten its tax exempt status.

    I hope that makes sense.


    Angel Rodriquez

    • Angel,
      I think that, when in doubt–don’t.

      Your new NP has its Mission just established, and it needs time and effort to get it to motivate donors.

      Having some of those donated funds going to currently unrelated expenses of the other for-profit entity, seems to me to be surely inviting problems with the IRS and with the state in which you are incorporated.

      I see no link whatever with the financial servicing company being given funds donated to the current education-related non-profit.

      Appears to me to be a most risky idea.

      Check with the IRS or certainly with an attorney.

      • What about creating a for-profit subsidiary? Is that something that is easily done once an actual non-profit has been established or is it pretty much another lengthy process?

      • Angel,
        I do take chances sometimes, getting into intricate and ever-changing non-profit regulations and law issues with folks who come into this website.

        Mostly, common sense takes hold, but even then the IRS could see things differently. And, a lot of laws could be counter to what you or I could think as being sensible.

        You must consult with an attorney skilled in non-profit law and talk to someone at the IRS.

        Your latest possible scenario troubles me.

        Your new non-profit is probably not yet off the ground. It has no history, and worse, instead of working fully on its future, there is the distraction and possible Mission drift to establish a non-profit funding pass-through or that it is a recipient of charitable funds.

        Take care that your Articles of Incorporation and your Mission are not blurred so as to confuse, or to inadvertently mislead, your non-profit’s supporters.

        I am just an old non-profit fund-raising practitioner, so the organizational developments you are pondering, are far out of my field.

        Do it right, and go to the legal experts.

  7. Carolyn,
    As far as I have come to know, all non-profit fund-raising endeavors/campaigns put people "before," in front, actually, of the money needed to be raised to serve them. There cannot be "profit."

    Profit can only be applied to the for-profit sector. Investors, shareholders, owners, all expect to profit.

    In the non-profit, 501 (c) (3) sector, organizations belong to the community. Personal gain is not allowed. Any “profit” by the NPO can, with board consensus, be used to guarantee cash flow, entered into endowment, and to expand existing programs, or fund new programs.

    Funding is contributed income.

    We can all agree that fund-raising for non-profit organizations is more than money. People must always come first.

    We know that non-profit organizations are all about people saved and served, animals rescued and sheltered, the environment preserved and protected, and many other worthy causes. However, we can readily understand that the concern to raise the funds to sustain those organizations often has that effort become the front and center issue and talk is often mostly in dollars.

    But, we must never let the need for money obscure, or put far into the background, our organization’s reason for being—its mission.

    That is my take on what I thought I read from your note. I may have missed your point.

    Are you talking about an organization which may be selling to its constituencies a vendor’s or a company’s products, thus earning that sort of income?

    Are you receiving corporate money for its sponsorship of one of your programs?

    Do please clarify, if necessary. Thanks.

  8. Tony,
    What about campaigns that are driven by a social enterprise that puts people before profit? Funding woiuld be treated as income. Do you have any advice about that?  Thanks

  9. Tim: Have done so, but recognize they are rough drafts slated sometime to be refined and finalized to be suitable for posting on our site. Hopefully, they will be of some use.

  10. Hello,
    I found your article helpful and informative. May I please receive the referred to PDF of the sponsorship process?

  11. Dan: Send me your e-mail address should you want to have a PDF of what I have compiled as a sponsorship process you may be able to use.

    • Please forward to me the pdf referenced, above?
      I am the president-elect of the above organization.
      The National Conference of all the chapters will be held a year from now in St. Louis and we need to raise some funding from outside of the all-volunteer organization in order to provide be sure the experience is worth the trip for the delegates and competitors.
      All tips and advice would be very gratefully received.
      Thank you!

  12. Dan: The article you read, above, is to be used for any type of sponsorship, be it an event, program, or service. Same as what I say in my book. What turns the corner is your answer to the sponsor asking, "What's in it for us?" So, the listing of the ways you give recognition and credit would hold and be compelling no matter what is sponsored.

    Such things as, or nearer to your program, just to get the idea … ways for you to show the sponsor that you can …

    • Enhance the image of your company as a good corporate citizen of the community;

    • Promote good will among your employees;

    • Foster, establish, strengthen, and enhance key business relationships with customers, clients, distributors, and with financial, industrial and governmental institutions;

    • Enhance your image among your stakeholders;

    • Generate increased awareness and appreciation of your business among the general public.

  13. Tony: I found this useful.  It was a little centered on events.  We are looking at sponsorship for a program.  Does your book cover that?

  14. Excellent information and very helpful. thanks

  15. Cheryl: Good luck in your new job. While a great deal of planning and work will produce the corporate fundraiser from beginning to end, as much advance thought as possible must go toward what happens once the event is over; to send special thanks to the sponsors who provided the funds which will make your Fundraisers successful.

    Too often, in the flurry of activity following such events, some non-profits fail to carry through with the best way to acknowledge sponsorship support. That does not then bode well for the next time the organization solicits sponsorship funds from the same donors.

    As you compose your thank you letters, think in terms of what a sponsor of your fundraiser would want and would appreciate from your organization:

    (1) prompt acknowledgment—a few days at the most, not weeks after the event.

    (2) knowing the event was a success and that “we could not have done it without you.”

    (3) how much net profit was realized. (Only if that number is significant. If it was not, refer to the net proceeds in a general way.) In any event, never even hint at falling under expectations.

    (4) being informed of the real good the sponsorship money will do to help carry out the organization’s mission.

    (5) a notebook, scrapbook, or folder containing examples of all promotion and publicity for the event, especially with liberal mention of the sponsoring company or companies.

    (6) receiving an official thank-you letter signed by the chairperson of the event, or by the organization’s Board President. Not a staff member. The best way to present your organization’s thanks and acknowledgments is in person. See if representatives from the sponsor would like to meet with your organization’s officials for the presentation at their corporate offices, or at some type of reception you will host on your premises. If that is not possible, simply do so by mail.

    Getting to the core of producing such a fundraiser, do take a reading of another article which may help overall in the planning and production of any fund-raising event.

    — Your Organization’s Next Special Event: “Fund-Raiser” Or “Friend-Raiser?”

  16. This is basically it thank you good to have something in writing i am the new corporate fundraiser and this will help


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