Shortcodes can only be used in Pages, not Posts

You can do this easily with a custom query. Try something like this (I haven’t tested this code, but it should be fine): (EDIT: Changed below to “get_the_post_thumbnail”, also added $post->ID)

<ul>
 <?php 
  $args = array(
   'cat' => '17',
   'posts_per_page'=>20
   );
  $sponsors_query = new WP_Query( $args );

  while ( $sponsors_query->have_posts() ) : $sponsors_query->the_post();
    echo '<li>' . get_the_post_thumbnail($post->ID, array(50,50)) . '</li>';
  endwhile;

  wp_reset_postdata();
 ?>
</ul>