Considering Cause Marketing? Tips for a Compliant Co-Venture
From cash register donations to charity nights at your favorite restaurant, cause marketing campaigns have become part of the fabric of daily life. Also known as commercial co-ventures, these creative partnerships present a wealth of opportunities for nonprofits and businesses to engage existing fans, create new ones, and drive positive change. Their continued popularity shows that consumers have embraced the idea of turning everyday transactions into a chance to support worthy causes.
But before you lay plans for a bowling night or candy sale, it’s important to realize that commercial co-ventures are regulated activities in many states. Before you sign a contract, there are some regulatory tasks to cross off your list to ensure that your campaign meets state requirements.
What is a commercial co-venture?
A commercial co-venture is an agreement between a business and a charitable organization to conduct a revenue-generating activity and funnel a share of the proceeds to the charity. In addition to point-of-sale solicitations, they include initiatives such as:
- Co-branded merchandise
- Charity events
- Buy one, give one campaigns
- Employee volunteer days
- Portion-of-sales campaigns
Commercial co-ventures are generally most successful when the campaign is authentic to the company’s brand and mission. For example, Coke’s Arctic Home campaign, a co-venture with World Wildlife Fund to benefit wild polar bears, is a natural fit with the company’s brand, which has featured polar bears in its advertising as far back as 1922.
What do co-ventures require?
In 24 states, co-venturers must meet special requirements. Some states merely require certain disclosure language to be used in advertising, or specific provisions to be included in the co-venture contract. Alabama, California, Massachusetts, and South Carolina require businesses to register and submit a copy of the contract to the state charity office within a prescribed period before launch of the campaign. In Illinois, the nonprofit is required to register and file the contract. In states that require submission of the contract, co-venturers must generally file a financial statement at the conclusion of the campaign disclosing receipts and expenditures. Massachusetts requires co-venturers to secure a bond.
In addition to these specific requirements, nonprofits must meet state fundraising registration requirements wherever they will be raising funds. If the campaign is conducted online, the agreement may be subject to registration and reporting requirements nationwide.
State charity officials may verify the nonprofit’s registration status as part of the co-venture contract review process, and many states advise co-venturers to make sure that the nonprofit is registered before signing contracts. Many states further recommend that potential donors check the registration status of charities before writing a check.
How much does registration cost?
Registration fees are generally low, but with different requirements in each state, the paperwork does require diligent attention. A compliance specialist experienced in charitable solicitation registration in all 50 states can help you ensure that you’ve covered all the bases or even complete the paperwork for you.
Compliance builds a strong foundation
Like other fundraising requirements, commercial co-venture regulations were created to protect the public by ensuring that campaigns fulfill their promises. They also protect the co-venturers by ensuring that the terms of the contract are fulfilled.
If you would like help setting up a compliant campaign, or if you have questions about any aspect of co-venturing, please get in touch with Harbor Compliance or give us a call, 1-888-995-5895. Our compliance specialists have guided nonprofits through co-ventures in every state, and they would be happy to steer you in the right direction.
Brock Klinger leads Harbor Compliance’s fundraising compliance sales team. He handles charitable solicitation, professional fundraising, commercial co-venture, and charitable gift annuity client relationships across all jurisdictions and industries. Brock’s work also includes nonprofit formation services, industry-specific and occupational licensing, and corporate lifecycle services. Brock previously worked as an executive search professional focused on legal, compliance and regulatory assignments for an international retained search firm. He graduated from the Pennsylvania State University with a degree in finance.