Music Funding 101
Non-Financial Sponsors
Some potential sponsors have more "goods" than they have cash, at least when it comes to giving it to bands. This can be because these people normally work with things that might be of use to the band, like motels, automobiles, or media. When this is the case, the sponsor is usually able to get good (or free) prices on these items, and thus he might be more interested in giving these things to the band instead of cash. These situations and items can be considered "directly useful," and can be a very good part of a sponsorship campaign. TalentFunding.com seeks out these non-financial sponsors as well as financial sponsors.
Similar situations (we'll call them "intangibles") are nice but not quite as useful. These would be things like legal services, consulting, training, etc. Yes, intangibles have a use and a purpose, but they are harder for the average band to value and work with. And if things get bumpy later on, the intangibles are going to be the first thing to come under fire. So we call intangibles "indirectly useful."
The value of a non-financial sponsor, in general, is that he has access to something (say, a chain of motels) which he can get for a good discount. So instead of him having to pay $60 USD per night for the band to get a room, maybe he only has to pay $30. The value to the sponsor is that he can give the band $60 worth of sponsorship for only $30. The value to the band is that by choosing this person to be one of the sponsors, the band gets someone that otherwise MIGHT NOT be able to be a sponsor at all. And therein lies the usefulness of non-financial sponsors: the band can gain additional sponsors that otherwise might not be able to participate.
What a band is trying to do with non-financial sponsors is fill-in the gaps from the cash sponsors. Thus the band would first find financial (cash) sponsors, and then pursue non-financial sponsors to cover the things that the cash could not cover. What the band would not want to do is start with a non-financial sponsor, since that would de-motivate any potential cash sponsors. Non-financial sponsors are, by definition, not able to put up as much cash as they can other items, so starting with them would be starting on the wrong end.
Beside obvious things like motels, transportation, and newspapers/radio/TV, other useful items would be food, restaurant chains (with space for performing), color printers, and clothing; basically any items that are required in quantity for touring and marketing.
In the contract with non-financial sponsors, the exact full-retail money value needs to be stated and agreed to by the band and the sponsor; the idea is to find out the "monetary level of usefulness" of the sponsor, so the sponsor can be viewed in proper proportion to the cash sponsors. And since a dollar (or monetary) number is placed on the agreement, no confusion can arise later on when the band "feels like the non-financial sponsor didn't do enough to warrant the amount of exposure he got." It's either agreed to in advance or it's not.
Occasionally, a band might find a sponsor who can offer either financial or non-financial support. In such cases, the band should always fight for cash. These sponsors will have the desire to offer non-cash, mostly because the items they are offering are something they have a surplus of, and losing some of them would not be devastating.
A last situation to consider with non-financial sponsors is when they are working with a funding rep that is representing the band. In these cases, it needs to be specified ahead of time how the rep will be paid: 1) commission on the full-retail value of the goods, paid from money from another (cash) sponsor, 2) some of the goods themselves, in an amount equal to what the commission would be based on the full-retail value of the goods, or 3) no commission at all. If option three is chosen, the band should not count on too many non-financial sponsors being sold by the rep.
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