Syncing Marketing And Legal: Compliance Considerations For Cause-Related Marketing – Advertising, Marketing & Branding

Doing good doesn’t get old. But marketing leaders know that
effective promotion of a company’s charitable giving requires a
subtle combination of bedrock advertising principles with a few
twists. It’s often here that marketing and legal meet at the
eleventh hour before a campaign goes live. Understanding the bounds
of federal, state, and local laws that regulate charitable
fundraising before these efforts launch helps marketing
teams to be more efficient.

Knowing what type of giving campaign is in play is critical for
understanding what regulatory requirements apply. While options
abound, some perennial favorites include:

CCV Campaigns. If your
company advertises that the purchase or use of a product or service
will benefit a charitable organization or purpose, this charitable
sales promotion may classify your company as a commercial
coventurer (CCV). Though corollary rules apply, like states’
Unfair and Deceptive Acts and Practices statutes, charitable sales
promotions are most directly regulated by states’ charitable
solicitation laws. These laws generally require a company that
acts as a CCV to obtain the charity’s consent before the
promotion starts and often require specific terms to be included in
those agreements. A handful of states also require pre-promotion
filings and bonds, as well as post-promotion reporting. State
fundraising laws and industry best practices, like the Better
Business Bureau Wise Giving Alliance Standards for Charity
Accountability, prescribe the details to be included in marketing
materials for these promotions.

Customer Donation Programs. A
customer giving campaign, such as point-of-sale contributions or
roundup-the-change promotions, is often referred to as a customer
donation program. State fundraising rules, industry developments,
and even takeaways from regulatory settlements may apply. In
general, when conducting a volunteer customer donation program, a
company should retain no portion of the funds raised, receive no
payment from the charity to conduct the program, ensure all
customer contributions are “timely” or
“promptly” transferred to the charity, and otherwise act
consistently with rules and industry standards applicable to
charitable trustees and third-party fundraisers. This includes
making “conspicuous” (or, in other circles, “unavoidable and
prominent”) disclosures of material terms like those
affecting how, when, and to whom the contributions will be given.
These are among the basic terms that should be included in an
agreement with the benefiting charity. Although these campaigns
typically raise minimal regulatory concerns, beginning next year,
companies should also review whether California’s law
and proposed regulations
applicable to “charitable fundraising platforms” will
require filings and various other compliance considerations in
connection with a customer donation programs conducted, in whole or
in part, online.

Sweepstakes. Offering a prize in
exchange for suggested charitable donations could be considered a
sweepstakes or a contest, depending on how the winner is
determined. Where the prize will be awarded randomly, the sponsor
should ensure the entry donation is advertised as
“suggested,” while also clearly providing a free,
alternative method of entry for the sweepstakes. In addition to
preparing comprehensive rules that are readily available to all
eligible participants, certain material terms must be disclosed in
marketing materials, and a company may need to register and post
bond for consumer-facing promotions where the prize(s) exceed a
certain value. Beyond federal and state lottery law considerations,
a company should meet states’ charitable solicitation laws,
too. Companies that are not in the “business of
fundraising”-nor wish to fall into this regulated space-should
ensure that all funds raised through the sweepstakes are retained
by the charity. By contract, the parties should make clear no
commission or fee will be retained by the company in exchange for
this promotion.

By knowing how a campaign will be viewed under applicable law,
and what this means from a compliance standpoint, your marketing
team will be well equipped to launch a corporate giving campaign
quickly, efficiently, and effectively when inspiration strikes.

This article originally appeared online in the June
2022 edition of Results Magazine published by the
Performance-Driven Marketing Institute. The content has been
modified slightly in light of state-law developments.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.