Cause Marketing Regulations
Cause Marketing and BrandingResearch 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 PromotionThe growth and popularity of cause marketing techniques to promote commercial products has risen significantly over the last decade.
Cause Marketing PartnershipsCause 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 CorporationsA 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.
Consumer Fraud StatutesADVERTISING -- 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 SuggestionsIn 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.
Charleston Principles: Guidelines for Charitable Solicitations Using the InternetThese 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.
General Exclusions from RegistrationMaintaining 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.
California Requirements for SolicitationsCalifornia 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. www.nasconet.org/agencies
California Charity RegulationsDepartment 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
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