Charitable sales promotions (a/k/a “CCV promotions”) are a popular cause marketing strategy for engaging customers motivated to support a cause through their purchases. State charitable solicitation laws regulate CCV promotions by imposing specific registration, reporting, contract, and advertising disclosure requirements on businesses conducting these promotions. 

CCV Registration and Reporting  

Companies that conduct these promotions nationally must register as a “commercial co-venturer” in seven states.¹  The registration and reporting process comprises a few key components

• • Annual registration of the business. 
  • Filing of a surety bond.
  • Filing of the contract and/or solicitation notice
  • Filing of a campaign report.

See this chart of commercial co-venturer state registration and reporting requirements.  Note that the nonprofit beneficiary of these promotions must be registered to solicit in the states where the promotion is conducted, and also has certain reporting obligations regarding the promotion.  

Contract Provision Requirements

The agreement between the business and nonprofit must include several contract provisions, including sales and donation estimates and state-specific compliance language.

Advertising Disclosure Requirements

CCV advertisements must include specific information about how a customer’s purchase will benefit a nonprofit organization. These requirements are most clearly articulated in industry best practices such as the BBB Wise Give Alliance’s Standards for Charity Accountability.  Notably, advertisements must include the percentage or dollar amount of the purchase price that will be donated to the nonprofit. Vague language like “a portion of proceeds from the sale of each product will go to ABC Nonprofit” does not comply with the disclosure requirements.

There are compelling reasons CCV campaigns are a widely used marketing strategy. CCV promotions allow you to directly involve consumers in the charitable impact while buying products and services they are (typically) already planning to purchase.  A well-designed promotion can make a brand’s product stand out among competing products. According to Edelman’s 2023 Trust Barometer, 63% of people buy or advocate for brands based on beliefs and values.  Unlike some of the alternatives discussed below, CCV promotions are the only campaign structure in which the customer’s purchasing decision directly supports the nonprofit partner.  This may be why hundreds of businesses choose to engage in CCV promotions every year.  The compliance requirements are very manageable with a bit of guidance and support (including resources like this article and those available on the Engage for Good website). Moreover, several registration service providers offer CCV registration services so you can focus on making sure your promotion is a success.  

While there are compelling reasons to conduct CCV promotions, a few situations suggest that a CCV promotion may not always be the ideal structure. Consider the following scenarios: 

1. The total anticipated donation amount is relatively small and may not justify the compliance costs and burdens associated with the promotion structure. 
2. The promotion is national in scope, but your nonprofit partner does not typically fundraise nationally (and may not even be based in the U.S.) and may not be prepared to register to solicit nationally just to be the beneficiary of your promotion.²   

For these and other reasons, companies may want to explore alternatives to the CCV promotion structure.

CCV Promotion Alternatives

Below are a few of the most common CCV promotion alternatives that allow a business to still actively partner with a nonprofit in ways that engage its customers and the public and publicly communicate its support for an important cause that aligns with its brand values, but without being subject to CCV compliance requirements. 

“Proud Supporter” Corporate Donation 

The closest alternative structure to a CCV promotion is if a business commits a fixed donation amount to the nonprofit and is granted the right to include language on its product packaging or other point of sale marketing materials about its support of the organization. For example, “Our Company is proud to support ABC Nonprofit with a $50,000 donation to support the planting of 50,000 trees.”  

To avoid being subject to CCV regulation, the marketing language should not state or suggest that the customer’s purchase of the product will trigger a donation to the nonprofit. Nevertheless, the business can still publicly communicate its support for a cause important to the brand while financially supporting the organization and raising public awareness for the cause, which helps garner positive goodwill for the brand and publicly reflect its brand values and commitments.   

Point of Sale Customer Donation Campaign

With over $5 billion raised through customer donations at retail checkout counters, it’s no wonder point-of-sale fundraising campaigns are a popular and effective way for companies to raise funds for their favorite charitable causes. Some companies have even added incentives by offering coupons or discounts to customers who make donations at checkout.  

If this type of campaign is conducted in stores nationwide, the nonprofit must be registered to solicit contributions in all applicable states. In addition, companies conducting these campaigns online at checkout must register as a “charitable fundraising platform” in California (and starting in 2026, in Hawaii) if the campaign includes online customers in those states.   An agreement should be established with the nonprofit, granting the company permission to solicit contributions from the public on its behalf. The agreement should outline the agreed-upon terms and include the solicitation dates, the states where they will be conducted, and the timing for transferring the collected donations. 

Matching Gift Campaign

Matching gift campaigns are popular fundraising strategies used by nonprofits to incentivize public donations through contributions made by one or more “match donors.” In a traditional matching gift campaign, a match donor pledges to match public donations dollar for dollar, often up to a specified donation cap and/or for a set time period.   With this type of campaign, the amount of the pledge that the “match donor” must pay is contingent upon the total donations received from the public in response to the campaign.  Companies can be powerful multipliers of public support by partnering with nonprofits to match donations made by their supporters.  Companies can also match public donations raised through customer donation campaigns that the business conducts at checkout.

When conducting matching gift campaigns, ensure you accurately describe how the campaign works, including the campaign period, the match amount (e.g., dollar for dollar), the method of donating that will trigger the donation (e.g., “donations made at checkout at Company stores during Earth Month” or “donations made through a unique matching gift campaign URL, like Company.NonprofitWebsite.org”), and any donation cap (e.g., up to $50,000).  Read this article for additional legal considerations in matching gift campaigns. 

Free Action Campaign

Free action campaigns involve donating to a nonprofit, triggered by actions taken by customers or other members of the public.  A purchase or use of the company’s products or services is not required. Free action campaigns allow a company to creatively engage the public, including: (1) signing up for your newsletter; (2) watching a short video; (3) liking, commenting on, or sharing a social media post; or (4) taking a survey. These actions can help generate greater awareness of your company, the cause, or both.  

The structure of free action campaigns is similar to CCV promotions because donations are triggered by specific actions that must be tracked. As such, the structure of contracts and disclosures for free action campaigns is also comparable to CCVs in establishing transparency and accountability. Currently, companies engaging in these campaigns online must register as a “charitable fundraising platform” in California (and starting in 2026, in Hawaii) if the campaign includes online customers in those states. 

Find the Right Campaign Structure for Your Business

Companies have numerous creative options for partnering with nonprofits through financial support and public awareness, while also building consumer loyalty for their brand and directly incentivizing product sales in the case of CCVs. Don’t let concerns about CCV regulation prevent you from finding the right win-win partnership with a nonprofit partner. 

Determining whether a CCV campaign structure is the most effective option requires considering your business goals, parameters, and constraints, as well as a practical understanding of compliance requirements.  It may be more achievable than you think!  If you conclude that a CCV promotion is not the right fit, consider exploring another creative way to partner with a nonprofit that will engage your customers and the public, generating significant positive goodwill for your brand while supporting an important cause.

1 The seven states that require companies engaging in these promotions (the companies are defined as “commercial co-venturers”) are: Alabama, California, Hawaii, Illinois, Massachusetts, Mississippi, and South Carolina.  California’s CCV registration requirement is optional, in that companies can follow certain contract and accounting requirements in lieu of registering.  Moreover, California’s new law governing charitable fundraising platforms requires companies conducting online CCV promotions to register as a charitable fundraising platform instead.  Illinois’ charitable solicitation law does not define the term “commercial co-venture,” but the state has taken the position that companies engaging in charitable sales promotions must register as “charitable trusts” if they generate more than $4,000 donations in a 12-month period.  Read this article to learn how to evaluate what state laws apply to an online-only CCV promotion.

2 Nonprofits soliciting charitable contributions nationally must register in about 38 states.

The post Should My Company Engage in a Commercial Co-Venture (CCV) Promotion?[br] <i>Strategic Considerations and Alternatives</i> appeared first on Perlman & Perlman.

Are you looking for answers to legal questions that arise in cause marketing and corporate partnerships?  If so, look no further!

Last year, Selfishgiving.com founder and blogger  Joe Waters and I distributed a five-question survey to businesses and nonprofits regularly engaged in cause marketing and corporate partnerships, asking them to share their top legal compliance questions and challenges.  After reviewing the survey responses, we decided to create a series of blog posts to address the most common corporate partnership legal compliance questions covering four issue categories: (1) Advertising Disclosures; (2) Registration and Reporting Requirements; (3) Contracts; and (4) Unrelated Business Income Tax (UBIT).   I hope you will find these FAQs useful in helping to navigate the legal and regulatory issues that arise as your company or charity engages in corporate partnerships.

Click on the FAQ headers below to read the answers to each question, which are posted on SelfishGiving.com, and sign up for Joe’s informative and entertaining weekly email newsletter, which has all the latest trends and strategic advice about cause marketing and corporate partnerships!

Part 1: Advertising Disclosures

1. Are cause marketing advertising disclosure “best practices”  required by law? Some of our corporate partners think they are just “suggestions.”
2. What if a company insists on structuring a campaign where the donation is based on a percentage of its profits, rather than a percentage of the purchase price?
3. Have any companies gotten into trouble with regulators for failing to include certain information in their cause marketing advertisements?
4. Advertising disclosure problems only present a real legal risk to the corporate partner, not the charity, right?
5. Can the company simply state on the hang-tag or store signage, “10% of the purchase price will be donated to ABC Charity, see www.company.com/ABCCharity for details,” and then include the website URL where the minimum guarantee and/or donation cap can be found?

Part 2: Registration and Reporting Requirements

Company FAQ

1. Our company is conducting its first ever cause marketing campaign. I heard that we may need to file state registrations. How do I know if I need to register, what does it entail, and how long will it take?  Note: The answer to this includes a chart on the state registration and reporting requirements applicable to companies acting as commercial co-venturers.
2. I operate a small e-commerce business in Massachusetts that sells clothing online, and would like to run a promotion in which the company will donate $5 to a local, nonprofit homeless shelter for every special edition T-shirt sold through our website. Does my company need to register nationally? What, if anything, does the nonprofit need to do?  Note: The answer explains how to determine the parties’ fundraising compliance obligations specifically in the context of an online cause marketing promotion.
3. Our company’s cause marketing campaign launched last week and we just found out we are supposed to register in certain states as a commercial co-venturer! Are we going to face fines or other penalties?

Charity FAQ

1. Our charity was asked to be the beneficiary of a company’s charitable sales promotion, but we’ve never engaged in a cause marketing campaign before. What do we need to be aware of before we proceed with this opportunity?
2. Our nonprofit is already registered nationally, and discloses all of its CCV partners as part of our annual charitable solicitation registration renewals, so we should be set with our CCV-related compliance, right?  Note: The answer includes a chart on the state reporting requirements applicable to charities that have entered into a CCV agreement.
3. Our charity was approached by a start-up company that wants to conduct a cause marketing campaign to benefit our organization. When we told them they may need to register with certain states and obtain bonds, they were concerned about the cost and burden of compliance. We don’t want to lose the opportunity to build a partnership with this company. What can we do?

Part 3: Contracts

1. We are entering into a cause marketing promotion in which our charity will receive a portion of the proceeds from the sale of each Sellco product. SellCo sent us a draft contract to sign. It seems to describe the promotion the way we discussed it. Should we go ahead and sign it?
2. What provisions should be included in our cause marketing agreement? Note: The answer includes a 15-point cause marketing contract checklist!
3. Is there a way to streamline the preparation of cause marketing agreements so they are compliant with all 50 states’ laws as well as for online sales?
4. Our corporate partner wants to enter into a multi-year relationship that includes a significant financial commitment, and will involve numerous customer activations.  Only the details for the first activation have been solidified. How do we draft an agreement to cover this type of arrangement?

Part 4: Unrelated Business Income Tax (UBIT)

1.  My organization, Charity Corp., has a corporate partner, Cool Products Co., that is conducting a charitable sales promotion in which it will advertise that it is donating a portion of the purchase price from sales of a particular product to Charity Corp.  Cool Products has asked to promote their sales campaign to our members and donors through email and social media. I heard that charities aren’t allowed to promote these types of campaigns because it might subject the charity to a tax called UBIT.  What is UBIT, and why and when is it a potential problem? How do we avoid creating taxable income?
2. How can our organization appropriately communicate about a corporate partnership to our donors/members/social followers without crossing  the line into marketing for the corporate partner?
3. The UBIT rules make our corporate partnerships team feel constrained in our partner cultivation strategy. What options does our organization have to provide value to our corporate partners?

The post Key Legal Issues in Corporate Partnerships appeared first on Perlman & Perlman.

• failing to properly oversee its commercial co-venturer, Harris Originals of New York and related entities collectively doing business as “Harris Jewelry,” which advertised on its website and retail stores that for each teddy bear purchased in the promotion, a specific amount of money would be donated for the express purpose of sending care packages to service members;
• failing to maintain the donated funds as restricted funds as they were designated for a particular purpose;
• using donated funds for purposes other than those expressly represented as the charitable purpose of OTA;
• spending funds on non-charitable purposes; and
• engaging in unfair, false, misleading, or deceptive solicitation and business practices.

According to the settlement, OTA acknowledged that it failed to oversee Harris Jewelry’s “Operation Teddy Bear” by failing to request an accounting of the numbers of bears sold or any other information in order to determine that the per-bear dollar figure sent to OTA was accurate.  The settlement further notes that OTA failed to provide Harris Jewelry with information on how the funds donated by the company were used, or how many care packages were sent to service members.

The settlement further notes that the funds donated were improperly expended on non-charitable purposes and states that OTA spent funds and took other actions without any discussion, approval, or oversight by its Board of Directors, in violation of the Boards’ statutory fiduciary duties.

As part of the settlement, OTA will cease operating and wind down its operation and OTA’s chief executive Mark Woods is barred from serving as a fiduciary or soliciting for any nonprofit. The agreement will assess civil penalties and requires OTA to continue to provide assistance, as needed, in the states’ continued investigation of Harris Jewelry.

The investigation was by led by New York and Tennessee, joined by executive committee states Nevada, North Carolina, and Washington and participating states California, Delaware, Georgia, Hawaii, Idaho, Illinois, Kansas, Louisiana, Maryland, Pennsylvania, and Virginia.

The multi-state enforcement action is a wake-up call for charities to make certain that they are actively overseeing charitable sales promotions conducted to benefit them. The following steps should be taken to meet these requirements:

• Ensure that each cause marketing relationship is subject to a written agreement;

• require the co-venturer to provide a written accounting with each payment made to the charity to certify that the correct donation amounts are being transferred based on the terms of the promotion;

• review the co-venturer’s advertisements to ensure that the language accurately reflects the terms of the promotion, including how donated funds will be used; and

• guarantee that donations are actually used for the purposes as specified in the advertising of the promotion.

Given a trend towards communicating specific consumer impact in cause marketing campaigns (often structured as 1-for-1 campaigns, in which the purchase of each item triggers a specific charitable impact), charitable sales promotions are increasingly generating restricted donations.  Thus it’s critical for charities to undertake the proper procedures to account for and expend these donations in accordance with the stated restrictions, and to ensure that company advertisements are correctly stating how funds will be used by the organization.  In our Nonprofit Times article, 5 Things That Are Making Regulators Buzz, my colleague Tracy Boak and I highlighted the solicitation and use of restricted gifts as a leading area of regulatory scrutiny.

Nonprofit boards must also provide proper oversight over their organizational activities and expenditures.  While the settlement agreement does not provide much detail on OTA’s governance problems, nonprofit governance is also a key area of regulatory scrutiny, with states increasingly seeking to hold nonprofit boards accountable for the organizations’ violation of state charitable solicitation laws.

This enforcement action is significant in that it apparently is the first multi-state regulatory activity involving cause marketing in almost two decades. The last such collective activity undertaken by the states was issued in 1999 in a report issued by the Federal Trade Commission (FTC), and sixteen State Attorneys General and the District of Columbia Corporation Counsel. It discussed regulatory concerns regarding false advertising, unfair and/or deceptive trade practices and consumer fraud arising from commercial-nonprofit product advertisements, with a particular focus on implied endorsements and exclusive relationships.

In 2012, the New York Attorney General’s Charities Bureau issued “Five Best Practices for Transparent Cause Marketing,” providing guidance to companies and charities on ways to ensure consumer transparency in their cause marketing campaign disclosures.

Does the OTA settlement represent the first of many more regulatory enforcement actions focused on cause marketing activities that may be coming down the pike?  Or does it simply highlight the first of several multi-state enforcement actions arising out of the new federal and state enforcement initiative named Operation Donate With Honor, which focuses on fraudulent solicitation activities purporting to benefit veterans and military service members?  We shall see.  In the meantime, we will continue to monitor state and federal regulatory enforcement efforts affecting charities and companies engaged in cause marketing and other fundraising activities, so please stay tuned.

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