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Cause Marketing Regulations

Cause marketing is frequently connected with green marketing -- some guidelines will keep the business relationship sustainable

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Cause Marketing and Branding

Research has shown that consumers are increasingly seeking more than just a quality product -- they want to purchase brands that resonate with their values. Marketers are therefore investing in cause marketing to leverage the emotional bonds consumers have with causes in a manner that translates into increased purchases and brand loyalty.

Cause Marketing Trends for Commercial Product Promotion

The growth and popularity of cause marketing techniques to promote commercial products has risen significantly over the last decade.

86% of Americans want companies to talk about their efforts to support social causes. However, only about 40% of Americans believe companies are communicating that information well. A survey of leading Fortune 500 consumer product manufacturers and national and regional retailers engaged in cause-related marketing showed that 100% of them intended to maintain or increase their involvement in those programs.

Cause Marketing Partnerships

Cause marketing (also known as cause related marketing or commercial coventures) is a commercial marketing partnership between a business and a nonprofit entity to market an image, product or service linked to a social cause or issue, for mutual benefit...and the benefit of the public.

The most typical example is an advertisement stating that a company will contribute a certain dollar or percentage amount of each product purchased (hopefully a beneficial product or service) to a specified charity.

Cause marketing is different from "social marketing," which is the use by nonprofits of marketing techniques to impact social behavior. This includes a nonprofit’s campaign to prevent smoking, prevent drunk driving, pollution, etc.

Cause marketing is also different from "corporate philanthropy," which refers to a charitable donation, whether financial or in-kind, made by a company or its corporate foundation, where there is no expectation of a return benefit

Cause Marketing and Disaster Relief by Corporations

A national poll taken in September 2005 following the Hurricane disasters shows that 87% of America believes companies should support relief and reconstruction efforts. More than half of Americans believe that corporate participation in recovery efforts should not be limited to initial cash or in-kind donations, but should continue until all affected areas are thriving again. (

Regulation of Commercial Co-venturers (CCV)

Many states regulate cause marketing relationships for many of the same reasons that charitable solicitation activity is regulated – to protect against potential consumer fraud or deception, and to ensure that the funds raised are in fact used for charitable purposes as advertised.

Commercial co-venturers, unlike professional solicitors, are not regularly engaged in charitable fundraising, but use the name of a charitable organization as part of a sales promotion in which it agrees to make charitable donations based on the sales of its products.

Commercial co-venturer regulation includes many of the same requirements under the different states’ laws. However, several states include unique conditions and requirements.

California requires that the designated funds be transferred to the charity at certain intervals throughout the campaign.

Consumer Fraud Statutes

ADVERTISING -- Federal and state consumer protection statutes are meant to protect consumers from unfair or deceptive practices, and often increase the legal remedies available by allowing either the consumer or the regulatory authority to bring a legal action against a company who is engaging in deceptive advertising.

At the state level, Attorneys General regulate consumer protection, while the Federal Trade Commission is the federal regulatory agency charged with protecting consumers.

Cause Marketing Suggestions

In April 1999, the Attorneys General (AGs) of sixteen states, and the District of Columbia Corporation Counsel produced a preliminary report, entitled "What’s in a Charity's Name?", which sought to inform the public about the consumer law standards and policy considerations related to such campaigns. The AGs are primarily concerned that many cause marketing campaigns may deceive, mislead or confuse consumers.
  • Cause marketing advertisements should disclose that the commercial sponsor has paid for the use of the nonprofit's name and logo.
  • Nonprofits should avoid entering into exclusive cause marketing relationships, which the AGs believe increase consumers’ misperceptions regarding product superiority.
  • If a percentage of the consumers’ purchase will only be given to the charity above a certain threshold, and that threshold is not met, a statement that such percentage will be given, without explaining the condition, will be misleading. Most states that regulate commercial co-ventures require the commercial co-venturer to disclose in each advertisement, the amount, in dollars or percentage, of the purchase that will benefit the charity of purpose.

Charleston Principles: Guidelines for Charitable Solicitations Using the Internet

These Principles have been adopted as guidance to state charity officials, but with the express intention of both creating a climate in which creativity and enterprise in the use of the Internet to support charitable activities is encouraged and in which the public interest is vigorously protected

The basic premise of these Principles is this: Although existing state laws govern charitable solicitations on the Internet, in many instances the use of the Internet raises new questions that state charity officials must answer in order to effectively carry out their statutory missions. Therefore, state charity officials should require registration of those over whom their state courts could constitutionally assert personal jurisdiction to enforce a registration requirement. State charity officials and those who solicit contributions using the Internet should note that in actions to enforce state laws against deceptive charitable solicitations, including fraud and misuse of charitable funds, jurisdiction typically exists over some organizations not required to register in the state.

  • An entity that is domiciled within a state and uses the Internet to conduct charitable solicitations in that state must register in that state. This is true without regard to whether the Internet solicitation methods it uses are passive or interactive, maintained by itself or another entity with which it contracts, or whether it conducts solicitations in any other manner.
  • An entity that is not domiciled within a state must register in accordance with the law of that state if: Its non-Internet activities alone would be sufficient to require registration; The entity solicits contributions through an interactive Web site; and Either the entity: i. Specifically targets persons physically located in the state for solicitation, or ii. Receives contributions from the state on a repeated and ongoing basis or a substantial basis through its Web site.; or c. (1) The entity solicits contributions through a site that is not interactive, but either specifically invites further offline activity to complete a contribution, or establishes other contacts with that state, such as sending e-mail messages or other communications that promote the Web site; and (2) The entity satisfies Principle III(B)(1)(b)(2).
  • An entity that solicits via e-mail into a particular state shall be treated the same as one that solicits via telephone or direct mail, if the soliciting party knew or reasonably should have known that the recipient was a resident of or was physically located in that state.

General Exclusions from Registration

Maintaining or operating a Web site that does not contain a solicitation of contributions but merely provides program services via the Internet—such as through a public information Web site—does not, by itself, invoke a registration requirement. This is true even if unsolicited donations are received.

Entities that provide solely administrative, supportive or technical services to charities without providing substantive content, or advice concerning substantive content, are not required to register.

State charity offices are strongly encouraged to publish their registration and reporting forms, their laws and regulations and other related information on the Internet to facilitate registration and reporting by charitable organizations and their agents while assuring proper public accountability by regulated entities.

Because disclosure to the public promotes informed giving, charitable organizations are encouraged to satisfy the IRS "widely available" standard by posting, without charge, their current Unified Registration Statement, their last three IRS Forms 990, and their complete IRS Form 1023 or 1024 application and resulting determination letter on their Web pages. Links to other sites that provide such information, including any relevant state agency, or other Web sites, are also encouraged. Such postings, however, do not currently fulfill any applicable registration requirements.

Download the PDF of the complete Charleston Principles

California Requirements for Solicitations

California requires registration of the Nonprofit; a written contract; preparation of final accounting and transfer of funds.
The National Association of State Charity Officials (NASCO) is an association of state offices charged with oversight of charitable organizations in the United States. The requirements and procedures for forming charitable organizations differ from state to state, as do the registration and filing requirements for organizations that conduct charitable activities or solicit charitable contributions. SOURCE: National association of State Charity Officials

List of US State offices that regulate charitable organizations and charitable solicitations.

California Charity Regulations

Department of Justice
Office of the Attorney General
1300 I Street, Suite 1130
Sacramento, CA 95814

California Statutes California Laws and Regulations for Charities, Fundraisers, Non-Profit Hospitals, Raffles with Links to other information.

Department of Justice
Office of the Attorney General
Attn: Public Inquiry Unit
P.O. Box 944255
Sacramento, CA 94244-2550

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