ADventures in Law

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Fall is in the air, and that means brands are planning holiday promotions. The season of buying is also the season of giving, and Q4 is prime time for brand + charity partnerships and cause marketing campaigns. Often, a for-profit brand – known as the commercial co-venturer (“CCV”) – donates a portion of proceeds from the sale of goods or services to a charitable organization (known as a “charitable sales promotion”). Several states have laws that specifically address CCVs and charitable sales promotions to protect against fraud and help ensure companies carry out the promised benefit. Companies need to navigate the requirements carefully to avoid legal missteps or loss of consumer trust. Here are five tips to keep your company on the Nice List this holiday season:

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CCVs and charitable sales promotions are regulated under state charitable solicitation laws, and multiple states require a CCV and beneficiary charity to enter into a formal agreement before conducting a charitable sales promotion. In some cases, the CCV and/or the charity must also separately register with the state. A CCV agreement should include (i) the minimum and maximum donation amounts, (ii) promotional timing, (iii) rights to use each entity’s marks and names, (iv) promotional obligations such as press events or ambassador participation (e.g., celebrity or executive involvement), and (v) agreed-upon media spend or marketing plans. In some states, a copy of the agreement must be filed with the state.

Remind your marketing teams that CCV agreements must be filed in several states. Therefore, plan at least 45 days prior to program launch to allow time to contract with your beneficiary charity, assess whether any registrations or bonds are required, and then work with counsel to make the necessary filings.

3. Check Your List Twice

Use consistent, clear disclosures in all promotional materials. Just like any offer to consumers, CCV promotions must be accurate and truthful. Virtually all state charitable solicitation/CCV laws require that consumer-facing statements made by the CCV or the charity regarding a charitable sales promotion include (i) the names of the charity and the company, (ii) the start and end dates of the promotion, (iii) the amount of the donation (whether a dollar amount or percentage), (iv) the purpose for which the donated funds will be used, and (v) if applicable, the minimum and/or maximum amount the CCV will donate to the charity pursuant to the charitable sales promotion.

4. Don’t Underthink Social Media

Traditional CCVs usually require a customer purchase to trigger the donation. However, promotions via social media that encourage an action such as a “like” or a “share” to benefit a charity are a powerful way to raise awareness for a cause. These “Goodwill” promotions are on the rise and require review to ensure cause marketing legal compliance. Goodwill promotions may be subject to the same restrictions as traditional CCVs, at least in some states. While this is an evolving trend, it is best practice to treat Goodwill promotions similarly to CCVs, with (i) a written contract with the beneficiary charity and (ii) clear disclosures on timing as well as minimum and maximum donation amounts.

Many states require both the beneficiary charity and the CCV to retain records of a charitable sales promotion and, in some states, a report must be filed at the end of the campaign. In any case, both the charity and the CCV should keep records and details on file in case of an audit.

Naughty or Nice: Five Tips for Cause Marketing Legal Compliance This Holiday Season