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Doing good never gets old. But marketers know that effectively promoting a company’s charitable giving requires a subtle combination of fundamental advertising principles with a few twists. This is often where marketing and legal meet on the eleventh hour before launching a campaign. Understand the limitations of federal, state, and local laws that govern charitable fundraising before launching these efforts helps marketing teams be more effective.
Knowing what type of donation campaign is at stake is essential to understanding what regulatory requirements apply. While options abound, some perennial favorites include:
CVC campaigns. If your business advertises that the purchase or use of a product or service will benefit a charitable organization or purpose, this charity sales promotion may classify your business as a business joint venturer (CCV). Although corollary rules apply, such as state unfair and deceptive acts and practices laws, charitable sales promotions are most directly regulated by state charitable solicitation laws. These laws generally require a company acting as a VCC to obtain consent from the charity before the promotion begins and often require specific terms to be included in such agreements. A handful of states also require pre-promotion deposits and bonds, as well as post-promotion reports. State fundraising laws and industry best practices, such as the Better Business Bureau Wise Giving Alliance’s Standards for Charitable Accountability, prescribe the details to be included in marketing materials for these promotions.
Customer donation programs. A customer donation campaign, such as point-of-sale contributions or rounding-the-change promotions, is often referred to as a customer donation program. State fundraising rules, industry developments, and even takeaways from regulatory regulations may apply. In general, when running a voluntary customer donation program, a company should not retain any part of the funds raised, receive any payment from the charity for running the program, ensure that all contributions customers are “timely” or “promptly” transferred to the charity, and otherwise act in accordance with rules and industry standards applicable to charitable trustees and third-party fundraisers. This includes “visible” (or, in other circles, “unavoidable and conspicuous”) disclosure of material terms such as those affecting how, when and to whom Contributions will be given. These are among the basic terms that should be included in an agreement with the recipient charity. While these campaigns generally raise minimal regulatory concerns, starting next year, companies should also consider whether California law and proposed regulations applicable to “charitable fundraising platforms” will require deposits and various other compliance considerations in connection with a customer donation program conducted, in whole or in part, online.
Prize draws. Offering a prize in exchange for suggested charitable donations could be considered a sweepstakes or a contest, depending on how the winner is determined. When the prize is randomly awarded, the Sponsor must ensure that the entry donation is advertised as “suggested”, while clearly providing an alternate method of free entry for the Contest. In addition to preparing comprehensive rules that are readily available to all eligible participants, certain important terms must be disclosed in marketing materials, and a business may need to register and post a bond for consumer promotions when the prize(s) exceeds a certain value. . Beyond federal and state lottery law considerations, a business must also comply with state charitable solicitation laws. Companies that are not in the “fundraising business” – nor wish to fall into this regulated space – must ensure that all funds raised through the competition are retained by the charity. By contract, the parties must specify that no commission or fees will be withheld by the company in exchange for this promotion.
By knowing how a campaign will be viewed under applicable law and what that means from a compliance perspective, your marketing team will be well equipped to launch a corporate giving campaign quickly, efficiently and effectively when inspiration strikes. to present oneself to.
This article originally appeared online in the June 2022 edition of Review of results published by the Performance-Driven Marketing Institute. The content has been slightly modified in light of changing state laws.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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