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“You generally can deduct reasonable advertising expenses that are directly related to your business activities. 

You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future.”

The line between advertising, marketing, and charitable donations is a blurry one. So I asked the experts to help define how businesses can use sponsorship as a tax write off:

“Sponsorship can most certainly be a tax write-off for small businesses as long as there is a clear connection between the sponsorship and your business.

For example if you are sponsoring a pee-wee baseball team and naming the team after your business or there is a listing of the business name in the program, then there is a clear connection between the sponsorship and the business. It is visible that the sponsorship is a promotional effort for the business. Thus, it would be written-off as an advertising expense.

However, if the sponsorship has no connection to the business and the sponsored is a non-profit then that is classified as a charitable contribution and cannot be written off as a marketing expense because the sponsorship is not giving your business any public exposure.”

Anil Melwani, CPA