Assessing the Potential of Sponsorship for Marketing Communications of Scottish Charities

Master's Thesis 2017 65 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media


Table of Contents

1. Introduction
1.1 Purpose and Background of the Study
1.2 Aim and Objectives
1.3 Overview of the Research Approach and Methodology

2. Industry Context of the Third Sector
2.1 Introduction
2.2 Third Sector in Scotland
2.3 Challenges of the Sector
2.4 Conclusion

3. Literature Review
3.1 Introduction
3.2 Common Practice in Marketing Communications
3.3 Sponsorship as a Form of Marketing Communications
3.4 Common Practice in Charity Communications
3.4.1 Message Framing
3.4.2 Strategic Branding
3.4.3 Giving Mechanisms
3.5 Conclusion

4. Research Design and Methods
4.1 Introduction
4.2 Research Philosophy
4.3 Research Approach
4.4 Research Strategy
4.5 Data Collection Methods
4.6 Conclusion

5. Research Results
5.1 Introduction
5.2 Development of Key Themes
5.2.1 Sponsorship and Brand Enhancement
5.2.2 Sponsorship and Marketing Communications
5.3 Conclusion

6. Discussion
6.1 Introduction
6.2 Final Assumptions
6.3 Practical Implications for Scottish Charities
6.4 Limitations and Future Research
6.5 Conclusion



Appendix 1 Interview Topic Guides:

Appendix 2 Consent Form:

Appendix 3 Exemplary Interview Transcription:

Appendix 4 Qualitative Data Analysis: Coding:

List of Figures

Figure 2.3.1 Challenges of the Third Sector

Figure 3.3.1 Leveraging Sponsorship for Brand Strategy

Figure 4.4.1 The Research ‘Onion’

Figure 5.2.1 Sponsorship in Marketing Communications

Figure 5.2.2 Count Analysis


Recent trends in the charity sector predict a challenging future in terms of procuring funding, as the Scottish Government is likely to decrease funds allocated to the third sector. In this context, this study aims to critically evaluate the potential of sponsorship as a marketing communications method for Scottish charities with focus on charities as the sponsoring entity. The author considers this assessment important, as it possibly holds the potential to generate sustainable government-independent funding through increased brand and cause awareness. The study is supported by a qualitative mono-method inductive research approach consisting of seven individual face-to-face interviews with a panel of experts from the corporate and charity marketing industries. Comparing marketing communications theory, sponsorship theory in particular as well as third sector theory with the research findings, this research project arrives at outlining possibilities for the development of starting points to develop fund-procuring methods with the means of sponsorship or adapted forms of it. One can record the following assumptions in regard to the feasibility of an implementation of sponsorship into charity marketing communications:

- Sponsorship provides significant benefits in terms of brand enhancement and
- identification, which would allow for a more targeted communication of the cause.
- Sponsorship can be deemed effective; yet, there is no predictability in measurement, which decreases its full applicability.
- Despite its favourable benefits, sponsorship is not viewed as viable for a use in the charity context due to a moral dilemma in justifying its cost.
- However, alterations or particular sections of sponsorship might be imaginable.

Nonetheless, the study is underpinned by limitations like the small sample size and restricted locational aspects surrounding the sampling, which, however, offer great potential for future research in this field.


I would first like to thank my thesis supervisor Kathy Brown for overseeing this masters dissertation. Her continuous support and guidance throughout every step of the process have been very helpful and are much appreciated.

Moreover, I would like to express my gratitude to the seven participants of the interviews for passionately sharing their valuable insight, as this has been decisive for the successful completion of this study.

Lastly, I would like to thank my family and friends for their continuous support throughout my academic career and the process of this dissertation, which would not have been possible without them. Thank you for enabling and encouraging me to relentlessly pursue my dreams.

Many thanks,

Lea Horn

1. Introduction

1.1 Purpose and Background of the Study

Charities worldwide are perceived to contribute significant value to society by providing essential social services, which otherwise would not be provided at all or to the same extent (Hyndman, 2017; Van Til, 2009; Taylor, 2010). Their continuous value for civil society is undisputable and highly justifies its strong representation as a core pillar of economy (Cordery and Sinclair, 2013). Current trends, however, show stagnation or even decrease of crucial government funding (Scottish Government Social Research, 2013). At the same time, the areas of responsibility of charitable organisations continue to grow. Consequently, charities are forced to operate on a large scale with limited resources not only in terms of monetary resources, but also in terms of volunteers and available workforce in general. Hence, charities need to find ways to counteract the lack of resources more creatively and independently (Anderson, 2017; Horn, 2017).

In addition to limited resources, charities also face strong competition, as the diversity of needs demands a diversity of charities covering those needs. Thus, the number of charitable organisations is likely to further increase (Anderson, 2017; Hyndman, 2017). Yet, studies have shown that with this particular development comes the necessity to create stronger distinguishing features given that there is a multitude of charities competing for donations while the public is becoming increasingly overwhelmed with the amount of seemingly similar donation appeals (Hopkins et al., 2014; Abdy and Barclay, 2001). Wühle (2017) points out that a holding on to outdated perceptions of moral and social behaviour cannot suffice anymore as a foundation of the management of charitable fundraising. Thus, he implies that the third sector needs to adapt with novel marketing strategies being at the core of this adaptation (Tarman, 2017; Bennett and Gabriel, 2003).

The notion of an increasingly business like third sector (Hurrell et al., 2011) justifies the general suggestion to make use of corporate marketing measures to enhance third sector performance. A key marketing strategy in this regard encompasses sponsorship marketing with the aim to enhance corporate brand equity. Despite the fact that there has been extensive research on charity marketing throughout the past decades, to the author’s knowledge there is no availability of a framework connecting said sponsorship to charity marketing to date. Given that sponsorship marketing proves to be a highly effective method in corporate marketing, an assessment of its potential for charity marketing could contribute to an extension of contemporary charity research and charity marketing performance measures.

Therefore, the study will focus on the understanding of sponsorship marketing and its potential for Scottish charities. The personal interest in the topic stems from a background of having volunteered with a Scottish disaster relief charity. Moreover, an academic background in event management, which is closely related to sponsorship marketing, will be used to make informed suggestions with regard to the feasibility of recommended measures and implementation approaches with the aim to provide a framework of how to integrate sponsorship into charity marketing.

From an academic viewpoint, this study will hold the potential to examine current charity marketing measures in their effectiveness. To do so, a comprehensive literature review and a critical analysis of factors involved in the study will allow for an appraisal of marketing practices for charities. The critical literature review will be used as the foundation for the author’s primary research.

1.2 Aim and Objectives

The aim underpinning the research is to critically evaluate the understanding of sponsorship as a means to enhance internal and external marketing communications in relation to a potential implementation in charity communications. Subdivided into academic and strategic objectives, four key objectives support the overarching aim:

- Academic Objectives:

1. Review and critically assess the literature concerned with the third sector in Scotland, charity marketing communications and sponsorship to achieve a comprehensive understanding of the current level of research.

2. Analyse sponsorship to seek out starting points for an adaptation for the charity sector.

- Strategic Objectives:

3. Collect and analyse primary data.

4. Make recommendations for an adaptation of corporate sponsorship for Scottish charities.

1.3 Overview of the Research Approach and Methodology

The basic approach of the research (Jonker and Pennink, 2010) is built on the presumption that there is no fix reality. It hence is of inductive and explorative nature following a constructivist research approach. In addition to an extensive secondary research exploring related literature, the research involves the conduction of face-to-face interviews with a panel of experts. This sample is chosen based on a convenience sample replenished by a snowball sample for a greater diversity of respondents (Adams et al., 2007).

The overall research approach is coined by comparing the implementation of sponsorship in the corporate environment on the basis of Scotland-based companies with the potential of Scottish charities. Chapter 4 will shed further light on the research philosophy, approach, key themes identified in the interview responses and the detailed process of data collection.

2. Industry Context of the Third Sector

2.1 Introduction

The third sector – or also called voluntary or charity sector – is generally defined as “the part of an economy or society comprising non-governmental and non-profit-making organizations or associations, including charities, voluntary and community groups, cooperatives, etc.” (Third sector – definition of the third sector in English | Oxford Dictionaries, 2017). The multitude of aspects combined in this definition, however, implies that it does not suffice to solely view the third sector from one perspective or on the basis of one definition, as it encompasses a large number of entities, parties and influences (Corry, 2010).

Despite the rather vague standpoint of third sector research on what constitutes the sector in its entirety, it is imperative to form an understanding of the third sector and its structures, threats and possibilities given its importance to the study. Ferreira (2014) distinguishes between two core trends shaping the third sector and the way it can be viewed. On the one hand, she points out that the sector can be understood as a “defined set of specific features” (2014, p. 1673) implying clearly marked boundaries to the areas of responsibility of the sector. Moreover, terming it third sector gives the impression of it being a melting pot for organisations or concepts, which otherwise do not fit into the common categories of the private and public sector (Corry, 2010).

On the other hand, Ferreira (2014) introduces the trend of viewing the third sector as highly multidisciplinary and practically boundaryless. This viewpoint underlines “the relations between different sectors that the third sector establishes or expresses” (p. 1673) and advocates for a hybrid approach incorporating methods, concepts and ideas from a variety of disciplines. Taylor (2010) also emphasizes the tendency of viewing the voluntary sector as increasingly incorporated into the public and private sector activities challenging the seemingly outsider position as the ‘third’ sector.

For this research, the author will follow the second assumption of an intersection of the sectors and various fields of research, since it opens up room for discussion and allows for a more impartial analysis of the status quo.

2.2 Third Sector in Scotland

Thanks to the flourishing voluntary sector in the UK and Scotland in particular, Scotland offers a prime position to examine crucial sector characteristics for an in-depth understanding of the structures underpinning the sector. The third sector in Scotland today consists of close to 24,000 registered charities with a slight increase noted over the years (Anderson, 2017).

Structurally, the sector is characterized as a self-governing private entity, which follows a non-for-profit approach and is partly underpinned by a voluntary motivation (Salamon and Anheier, 1992). Additionally, charitable organisations are mission driven rather than revenue driven. Yet, they still require revenue and income to execute tasks and services to perform to the stakeholders’ expectations. Among said stakeholders are local governments and the Scottish Government.

Continuous public service reforms by the Government further strengthen the sector’s societal position. Additionally, the Government has created a so-called public-social partnership (PSP) model to foster the relationship between the sectors (Scottish Government Social Research, 2013).

Most charities seek funding from local governments. These governments receive grants from the Scottish Government, which cover up to 85% of the overall expenditures focusing on third sector activities (Scottish Government Social Research, 2013). Between 2013/14 and 2014/15, the budget for grants was at £24.5m. However, recent developments in government budgeting have shown that there will not be a further considerable increase in grants allocated to the third sector. Taking into consideration that the areas of responsibility of the sector continue to grow, one can presume that local authorities will not be able to wholly fund the increase of tasks of charity organisations in the future.

2.3 Challenges of the Sector

The sector currently faces three decisive challenges: the procurement of funds, the procurement of qualified workforce and the enhancement of brand awareness (fig. 2.3.1). These aspects significantly hinder an improvement and strengthening of the role of TSOs and their overall performance.

Figure 2.3.1: Challenges of the Third Sector

illustration not visible in this excerpt

Source: Horn, 2017

With regard to charities in particular, Hyndman (2017) defines three additional issues: a decrease in trust, a lack of accountability and a potential mission drift. According to Hind (2017), Tarman (2017) and Hyndman (2017), the decrease in trust stems from a number of incidents, in which charities previously have been accused of misleading people and misusing personal data. Moreover, in some cases charities have failed to provide the possibility to opt out of donor commitments presumably in an attempt to bind donor capital, albeit with immoral measures. As a consequence, “public trust in charities had fallen to the lowest recorded level since monitoring began in 2005” (Hind, 2017, p. 209).

These issues are proven to harm the image of charities resulting in a decrease of effectiveness of charity marketing practices outlined above. To possibly cushion and counteract these issues, one can claim that an implementation of sponsorship marketing holds the potential to improve charity marketing. That is as charity sponsorship pursues similar objectives as corporate sponsorship, which allows for the assumption of a possible adaptation of corporate sponsorship frameworks for the charity environment.

Nonetheless, it is to note that the cases mentioned above always only involve selected TSOs and never the whole body of charitable organisations. This implies that despite the fact that the issue of trust is fundamental, it also ultimately solely affects the minority of organisations, albeit affecting the majority of public perceptions on charities’ trustworthiness. Thus, it is important to clearly address the issue through targeted marketing communications and to acknowledge previous misbehaviour in the handling of donor acquisition and retention. By doing so, charities could succeed at matching the public’s demands for a more transparent, “honest and ethical fundraising” (Hind, 2017, p. 209).

Concerning the issue of accountability of charities and its portrayal and public perception (Hyndman, 2017), studies claim that a crucial feature of donor motivation is the aspect of knowing where and how an individual’s money is used. Thus, charities are required to report and account for their responsibility of an ethical use of donations, which is the foundation of charity accountability according to Mack et al. (2017). Yet, frameworks on charity communications and accountability still do not provide sufficient possibilities to cover the issues evolving around the sector (Ryan et al., 2014).

As already pointed out, charities centre their operations on a particular mission or cause. In the course of the development of charities functioning increasingly business like, however, the risk of a potential mission drift has arisen (Hyndman, 2017). This mission drift is reinforced by the sector challenge of a constant lack of resources especially with regard to funds. Hence, one can claim that charities risk a decrease of authenticity and credibility by neglecting their initial purpose and mission in an attempt to appear more business like and increase competitiveness. Glennon et al. (2017) substantiate this notion of charities purposely diminishing the impact of their mission in order to open up to a wider group of potential funders and beneficiaries (Tarman, 2017). They put forward that the sole reason to undermine an organisation’s mission is the outlook on a more reliable funding.

Notwithstanding, a charity’s mission builds its foundation and is one of the core pillars of differentiation. Thus, one should rather aim to develop strategies to make a charity’s mission stand out as a means of enhancing transparency and purpose to attract symphasisers than weakening an otherwise strong moral position by pushing the mission aside.

Given the pressing nature of these challenges, it is axiomatic to develop strategies to counteract them. This could be achieved through increased transparency and communication of information (Hurrell et al., 2011). Also, an in-depth examination of methods enhancing external stakeholder communication through well-directed marketing communication might thus provide a useful appraisal on how to improve the current issues of the third sector.

Nevertheless, there are first approaches to diminish the issues mentioned above. With regard to attracting qualified employees, studies have shown that employees are willing to accept a lower salary if they experience a form of value payoff from their job (Nickson et al., 2008; Achieve, 2015). Taking into account reasons for joining a TSO, the type of work and organisational values generally rank significantly higher than salary. Hurrell et al. (2011) claim that the third sector could use this millennial attitude in what they describe as a leveraging of value congruence between the organisation values and values supported by potential employees. Brown and Hesketh (2004) suggest emphasizing an organisation’s mission and values in the recruitment process to attract committed and skilled employees.

Moreover, an assessment of the difficulties of the third sector has revealed that one of the main issues in marketing the sector as an attractive, lucrative and promising service provider and work environment is, in fact, an undermining of the importance and the role of the third sector for both economy and society. Nevertheless, this issue potentially only exists due to an ineffective external and internal stakeholder communication.

Existing approaches to counteract predominant challenges thus involve a strengthening of marketing communication measures with focus on conveying mission, vision, values and aims of an organisation as clear distinguishing features.

2.4 Conclusion

This chapter has shed light on the composition of the third sector in Scotland, which can be characterized as a mission driven, increasingly important core pillar of society and economy. An evaluation of overarching difficulties of the sector and charities in particular based on secondary data, however, has shown that the sector faces vital challenges in generating resources in the form of funding and workforce. Additionally, it struggles with enhancing the image of the sector in the public eye as a serious employer as well as counteracting a lack of trust, accountability and the risk of a mission drift.

Yet, the in-depth evaluation of the Scottish third sector also outlines starting-points with regard to a possible exploitation of value congruence and an increased effort to enhance the role of the sector through expanded marketing communications strategies. The following chapter will build on these findings with a detailed analysis of the specific case of charities and charity communications.

3. Literature Review

3.1 Introduction

With the overarching aim to assess a potential implementation of sponsorship as a strategy in charity communication, chapter three aims to explore the scope of marketing communications as well as sponsorship as part of a communications strategy to develop an understanding of the current level of research in this field. In a next step, the literature review will assess common practice in charity communications. To connect charity marketing with the prime focus of this study that is sponsorship, the chapter will discuss sponsorship in relation to branding and conclude with potential connecting points to charity communications.

3.2 Common Practice in Marketing Communications

Generally, marketing communications is concerned with conveying brand or organisational elements to emphasise the organisation’s value for the customer or target audience (Fill and Turnbull, 2016). Hughes and Fill (2007) ascribe different interrelated dimensions to the scope of marketing communications, which all translate to a brand’s audience experience: planned and unplanned branding and communications measures as well as product and service experience-based communications.

Marketing communications is highly flexible and involves a great variety of tools and methods to enhance brand communication. These encompass, inter alia, advertising, public relations, direct marketing, or “added-value approaches such as sponsorship” (Fill and Turnbull, 2016, p. 11). Additionally, the choice of media channels and the creation of engaging content play an important role and marketing communications.

The prime goal of marketing communications is to enhance brand awareness and drive audience reaction and interaction with a brand like participating in sponsored events. By doing so, organisations might achieve a strengthening of brand values or an overall positive attitude towards the organisation (Fill and Turnbull, 2016). Given its changeable and adaptable nature, this form of marketing can be considered suitable for a diverse range of industries and sectors like the charity sector, as the goals pursued through well-directed communication measures are also highly sought after among charities.

However, many of the tools and methods like sales promotions involve a significant financial effort upfront. Taking the scarcity of liquid financial resources within charitable organisations into account, one has to define feasible ways for charities to be able to engage in these kinds of marketing communications as well.

3.3 Sponsorship as a Form of Marketing Communications

As pointed out above, sponsorship is a method of marketing communications, which creates added value and focuses on creating brand experiences for the audience to enhance visibility. Over the last two decades, sponsorship has been established as a core feature of corporate marketing (Woisetschläger and Michaelis, 2012). It is highly regarded as a cost-effective means of creating a competitive advantage by attaching corporate values to unique experiences and emotions transmitted through sponsored events, facilities or individuals (Delpy et al., 1998; Abreu Novais and Arcodia, 2013). According to Dean (2002), sponsorship can be generally defined as “investments in causes or events to support corporate objectives” (p. 78). These objectives can be classified as economic (return on investment (ROI), revenue, leveraging brand awareness) and noneconomic (image enhancement, cause-related marketing (CRM), altruism) objectives underpinning corporate management.

The growing interest in the inclusion of sponsorship in the communications mix has lead to extensive research in regard to its effects. Yet, many scholars claim that there remains a lack of knowledge concerning the measurement of sponsorship effectiveness (Woisetschläger and Michaelis, 2012). The following sections will explore the two key effects sponsorship recall and brand building prevalent in relevant research, which can be deemed desirable as outcomes of a potential implementation in charity marketing communications.

One of the main effects, which is prompted by sponsorship, is sponsorship recall. This means that the public is able to remember the sponsor of an event or cause resulting in increased brand awareness. Sponsorship recall is significantly enhanced when there is a perceived sponsor-property fit (Chien et al., 2010) referring to the fact that the sponsored entity ideally is related to the sponsor’s values and objectives. Chien et al. (2010) claim that this perceived fit could be evoked either by sponsorship category relatedness (SCR) or by event personality fit (EPF). The latter implies that an event communicates specific ‘personality’ characteristics like lifestyle or sophistication and thus can be assigned to a group of events, which all target the same personality characteristics. This is believed to create a fit between the participant’s expectations of an event and the actual offerings of respective event.

In contrast to that, SCR requires for a company to have a sponsorship portfolio consisting of various related sponsees. By coordinating a sponsorship portfolio according to categories, corporates can emphasise particular values or objectives to steer customer perception. Cliffe and Motion (2005) suggest an “integrated sponsorship portfolio approach consisting of community-based, niche/fringe events and mass-audience events combined with manufactured events” (p.1074). This offers the advantage of targeting several brand enhancing aspects like brand image, awareness and brand experience simultaneously.

However, although the concepts described above give the impression of being a guarantee for a successful implementation of strategies leading to sponsor-property fit, it is to note that the pursued congruence is rather dynamic and subject to constant change, since both an organisation and its sponsees evolve over time (Woisetschläger and Michaelis, 2012). Thus, one cannot foresee the duration it takes to be able to measure outcomes and gather relevant data on effectiveness to alter these concepts accordingly. This implies that an organisation has to be willing and able with regard to necessary resources to invest in measures, which are likely to only begin to be effective after a certain period of time. Considering the current position of charities with regard to resources, developing a sponsorship portfolio might not be a suitable approach in charity marketing given its complexity of implementation and execution.

In order to effectively leverage the positive outcomes of sponsor-property fit, Cliffe and Motion (2005) have developed a framework, which illustrates multiple possibilities to use sponsorship as part of a corporate marketing and brand management strategy (fig. 3.3.1). They point out that such a strategy should ideally consider all stakeholders and interest groups like consumers and employees. Additionally, the channel selection is critical, as the channels are a decisive factor in the communication of objectives and brand characteristics.

Figure 3.3.1: Leveraging Sponsorship for Brand Strategy

illustration not visible in this excerpt

Source: Cliffe and Motion, 2005, p. 1072

Key effects of corporate sponsorship, which can be deduced from this framework (fig. 3.3.1), encompass (1) the building and strengthening of a brand in its entirety (brand awareness, brand image, brand loyalty), (2) the initiation and management of relationships with stakeholders to enhance profitability, (3) the strengthening of internal relationships to enhance employee loyalty and commitment, and (4) the establishment of reliable distribution and communication channels. These effects are also strongly sought after by charities. Hence, this framework with illustrated outcomes can serve as a template for the author’s study in an attempt to develop a framework for a practical embodiment of sponsorship for charity marketing strategies.

The second key effect of corporate sponsorship as outlined above involves brand building. This effect closely ties into the study of brand management. According to relevant literature, several elements can constitute a brand like the name, logo or slogan or their combination (Keller, 2013). The prime purpose of these elements is to create distinguishing features or even competitive advantages to stand out among competitors. The provision of strong organisational identifiers also enables brand recall. Thus, one can say that sponsorship marketing and brand building are closely intertwined.

Technically speaking, everything can be branded regardless of whether it is a product, service, place, organisation or individual. Hence, a charitable organisation can also be viewed as a brand and can be positioned as such. Given the multitude of different charities in Scotland, it is necessary for a charity to develop a competitive edge. Chien et al. (2010) claim that strategic sponsorships can function as an important carrier of brand communication and notably shape brand personality. This, in turn, increases differentiation and enhances the competitive edge (Aaker, 1997), which is greatly needed in the competitive positioning of charities.

3.4 Common Practice in Charity Communications

Charities use marketing communications to raise awareness to their cause and to ultimately generate funds and attract and retain donors. Although charities acknowledge the necessity of marketing communications and advertising to increase competitiveness and make donor appeals more effective through differentiation, there appears to be a lack of strategy in the development of philanthropic marketing (Frumkin, 2006). The following sections will shed light on prevailing methods of charity communications and assess their value for an embodiment into future communication strategies.

3.4.1 Message Framing

To gain a better understanding of what constitutes common practice in charity marketing, it is essential to assess popular charity marketing measures in their effectiveness. One of the main measures used in charity marketing is message framing (Chang and Lee, 2010). One can distinguish between different types of framing, which show variations in effectiveness. Framing methods, which prove to be very effective, encompass asking frames. Schibrowsky and Peltier (1995) introduce low and high asking frames in their research. They conclude that low asking frames with regard to donor appeals are more successful than high asking frames. This means that asking for a low amount of donations from low contributors instead of a high amount of donations from low contributors will likely lead to a higher compliance rate and enhance donations. Also, asking for a small donation before asking for a larger sum can significantly increase the likelihood of making a donation because people tend to feel obliged to continue giving after an initial charitable contribution (Freedman and Fraser, 1996).

Given that the method of framing is a rather traditional and extensively researched form of generating funds, one can assume that charities have already developed strategies incorporating asking frames. However, this method of framing only aims to generate monetary resources and does not necessarily enhance organisational awareness. Hence, message framing with regard to asking frames can only be one component of such a strategy, as it does not wholly cover the difficulties charities are facing.



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Title: Assessing the Potential of Sponsorship for Marketing Communications of Scottish Charities