If you treat sponsorship like a donation, you risk trouble with the tax office. Most clubs make this mistake and it costs money, time and trust. Here’s the clear distinction, the receipt logic and real-world cases so you can keep everything clean from now on.

TL;DR — the 15-second answer

A donation is voluntary and comes without any return benefit → a donation receipt may be possible (depending on your local rules).
Sponsorship is value exchange, agreed in a contract → the club issues an invoice (not a donation receipt).
Get this separation right and you avoid tax headaches — and look professional to sponsors.

1) The one sentence that settles it

Question: Does the funder receive a commercially valuable benefit in return?

• No → donation

• Yes → sponsorship

Contrast (A vs B):
A = “Thanks for supporting us” (no rights, no guaranteed visibility) → donation
B = logo, posts, naming rights, stand space, lead capture → sponsorship

2) Donation: what actually counts

A donation is altruistic, voluntary and comes without a contractually agreed benefit.

Typical characteristics:

• no advertising, no rights, no guaranteed visibility

• contribution supports the club’s purpose

• the club may be able to issue a donation receipt (if eligible)

Example donation:
A parent transfers £200 “for the youth team”, with no expectation of being mentioned.

3) Sponsorship: why it’s a business deal

Sponsorship is a trade: a sponsor pays money / provides goods or services, and the club delivers marketing and usage rights.

Typical deliverables:

• logo on kit / boards / posters

• mention on social media / newsletter / website

• title sponsorship (“[Brand] Summer Cup”)

• stand space, product showcase, raffle

• MVP vote “presented by”

• QR CTA to landing pages, lead opt-ins

• reporting (reach, clicks, leads)

Rule of thumb: the moment you give rights, you’re in sponsorship.

4) Receipt logic: invoice or donation receipt?

This is where most clubs slip up.

If it’s sponsorship:

• issue an invoice

• never issue a donation receipt for the same payment

• define deliverables clearly in a contract (what, where, when)

If it’s a donation:

• donation receipt (if eligible)

• no contractually guaranteed marketing deliverables

Mini-check: if you promise “logo” or “mention”, assume sponsorship → invoice.

5) Tax logic for clubs (plain English)

For not-for-profit clubs, the principle is simple:

• activities tied to the club’s purpose may be tax-advantaged

• income generated through a value exchange can be treated as taxable trading income

Sponsorship is not automatically “charity income” because it involves deliverables. If you’re unsure, get advice before you improvise.

6) Real-world cases: decide in 10 seconds

Case 1: “We’ll donate £1,000, but please list us on your website.”

→ Sponsorship (deliverable: listing) → invoice

Case 2: A bakery provides food for a tournament in return for a stand + logo on posters

→ Sponsorship (in-kind value exchange) → invoice and document the barter properly

Case 3: A company transfers £500 “for youth development”, no requests attached

→ Donation → donation receipt may be possible

Case 4: “£2,500 for title sponsorship + 3 Reels + QR raffle”

→ Sponsorship → invoice + contract + reporting

Case 5: A sponsor says “we just want to help”, but you put their banner on the fence

→ banner/logo = sponsorship → invoice (even if it feels like a donation)

7) Common mistakes — and the better alternative

Mistake 1: “Let’s split it: 50% donation, 50% sponsorship.”

In practice, this can be risky. Once deliverables exist, the classification gets scrutinised.
Better: keep it clean: either true sponsorship with invoice, or true donation with no rights.

Mistake 2: Verbal agreements

“Let’s sort it later” kills professionalism.
Better: one-page agreement + deliverables list + term.

Mistake 3: No proof of delivery

Sponsors want evidence — and you want renewals.
Better: photo folder + post links + simple KPI summary.

8) Copy-paste wording you can use

For sponsorship (email):

“Happy to offer you a sponsorship package. It includes the following deliverables: [list]. We’ll formalise the partnership in a contract and issue an invoice.”

For donation (email):

“Thank you for your support. As no deliverables are agreed, this is treated as a donation. If applicable, we can provide a donation receipt.”

9) Your quick plan for this week (no overthinking)

1. List what you currently give as deliverables

2. Sort each payment: donation vs sponsorship (10-second rule)

3. Standardise: 1 invoice template + 1 donation template

4. Process: agree deliverables first, then issue the right document

FAQ (short & direct)

Can we still say thank you to a donor publicly?
Yes. Gratitude is fine — as long as you don’t promise commercially valuable rights.

What about listing a name in a club magazine?
If it’s agreed as a deliverable: sponsorship. If it’s purely editorial with no promise: it may be fine — but clarity wins.

What about goods or services?
If there’s no return benefit: donation. If you promise logo/stand/posts: sponsorship.