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Cause marketing is predicted to reach $2 billion dollars in 2016, a projected increase of 3.7% over 2015. As cause marketing grows, marketing departments need to be aware that certain campaigns may trigger legal obligations for both the for-profit marketer and its charitable beneficiary.
While definitions vary from state to state, in general, a “charitable sales promotion” is an advertising or sales campaign conducted by a commercial co-venturer, which represents that the purchase or use of goods or services offered by the commercial co-venturer will benefit a charitable organization or purpose.
Generally, a commercial co-venturer is a person or entity regularly and primarily engaged in commerce (other than in connection with raising funds for charities) who conducts a “charitable sales promotion.” Approximately twenty-one jurisdictions regulate commercial co-venturers engaging in charitable sales promotions. Only six states require a registration but many others require a written contract, require certain disclosures, and impose record keeping requirements.
Some states have broader definitions than others. For example, Massachusetts includes in its definition of a commercial co-venturer “any person who promotes the sale of any good or service which is advertised in conjunction with the name of any charity.”
The states that regulate commercial co-ventures have different requirements but, in general, the legal requirements imposed by these statutes include:
Approximately twelve states require advertisements to disclose the expected portion of the sales price, percentage of gross proceeds, or other consideration the charity is to receive as a result of the sales promotion. Failure to comply can prompt investigations from state Attorneys General which can lead to fines and negative publicity. The better approach is to do it right the first time. Once a company has conducted a compliant and successful charitable sales promotion, similar campaigns will be easier to implement going forward.
If you are seeking advice and assistance with commercial co-venturer contracts, disclosures and registrations, contact firstname.lastname@example.org.