As businesses from the National Football League to the corner store to your neighborhood dry cleaner paint their products pink to support breast cancer awareness this month, states continue to update and refine the rules and regulations surrounding the cause marketing campaigns where businesses pledge donations to charities based on consumer purchases.
Not all cause marketers are aware of the different Commercial Coventure laws that govern cause marketing campaigns. In general these laws require the seller to have a written agreement with the charity that specifies the exact percentage or amount the charity will receive and the terms of payment. To say “a portion of proceeds” does not qualify. To initiate a campaign that supports an issue yet without informing a specific charity about the gift upfront is well meaning, but not legal.
For those running a cause marketing campaign in Massachusetts or Alabama you should know those states have the strictest regulations, where the seller is obligated to register with the state as a “commercial coventurer,” and post a surety bond. You need to fulfill these steps prior to kicking off the program, sometimes as much as two weeks in advance. Internet sales are included.
New this month, the state of Maine repealed its commercial coventure rules (previously among the toughest requiring a $25,000 bond before projects start). The newly passed “Act to Streamline Charitable Solicitations” lifts the requirement to register promotions, However cause marketers selling products for charity in the state still need to ensure the non profits which benefit from the program are registered there.
Finally, it’s important to remember that even in states without commercial coventure rules Attorneys General are increasingly issuing guidance on cause marketing campaigns. Be mindful that in many states these promotions are still subject to laws governing unfair or deceptive advertising.
So what does this mean for you? Be sure to know the rules where you are doing business before you embark on a cause marketing campaign so that you can focus on the positive impact the work can do by partnering with community and customers. It makes sense for the success of the campaign too, as your charitable partners ought to participate in helping the promotion overachieve.