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A donation is usually a gift (to a charity or library) to support a cause
A sponsorship is usually to support a walk or a race or an event.
Yes there is a fine line between the two.
I believe a second difference you might find is a donation doesn't always require credit, while a sponsor would require the company logo of the sponsor on a shirt or banner or napkins, somewhere visible during the event. That being said, unless you want company branded tuba's in your class, I'm guessing you might be looking for a donation.
I run a music school for kids and we are trying to help needy familys afford music classes for their kids. We want to get corporate sponsors to help offset their tuition. We are not a non-profit and the sponsors will be aware of this. Is there a difference between sponsoring and donating or this just sales terminology?