Effective Cause Marketing: Ways to Ensure Your Good Deeds Go Unpunished

by Nutter McClennen & Fish LLP

Collaborations between charitable organizations and for-profit businesses to simultaneously promote a cause and raise funds for the charity have been demonstrably successful and are occurring with increasing frequency. When embarking on these initiatives, clearly your marketing and development (or advancement) professionals are key team members, but remember to put your legal department or legal advisor on your team to ensure that your good deeds are not punished.

State-Based Charitable Solicitation Regulation

In most states, the Attorney General is the authority responsible for regulating charitable solicitation activities. Thirty-nine states and the District of Columbia regulate charitable solicitation in some form and all of these states require charitable organizations to register in those states in order to solicit donations. The basis for this registration is grounded in the law of consumer protection. The Attorney General's interest lies in protecting the public from potential fraud, abuse, or misrepresentation on the part of the parties who are soliciting funds. Most states focus on registration and disclosure as the main tools for ensuring that the public is allowed to make informed decisions when being solicited. Typical penalties for not registering to solicit charitable funds or for misusing charitable funds include the imposition of fines and penalties, cease and desist letters, losing the ability to fundraise in a state, and, in cases of significant noncompliance, lawsuits.

Efforts to Manage Online Activity and to Streamline Compliance

Two aspects of charitable solicitation that have perplexed regulators and those organizations who are making good faith efforts to comply with the requirements are online fundraising activity and multi-state fundraising activity. Regulators have banded together in two main initiatives to attempt to account for the fact that our system of multi-state regulation of activities that often cross state lines can be cumbersome and counterproductive for the parties who are trying to accomplish positive change. In 2001, the National Association of State Charities Officials (NASCO) issued a set of non-binding guidelines, the Charleston Principles, to help charities determine whether or not they have a sufficient presence in a state to trigger a registration requirement. The primary solicitation tool addressed by the Charleston Principles is online fundraising activity -- i.e., does the fact that a charity maintains a website that residents of a state may visit require an organization to register to solicit charitable funds in all 40 jurisdictions? According to the Charleston Principles, website activity alone does not trigger a registration requirement. Under the Charleston Principles, a charity should register in a state that regulates charitable solicitations based upon its website activity if:

  • The charity maintains an interactive website (i.e., a website that accepts donations); and
  • The website specifically targets persons located in that state OR the charity receives contributions from the state on a repeated and ongoing basis through its website.

The Charleston Principles also indicate that a charity should register to solicit in a state where a charity maintains a website that is not interactive, but it specifically invites a potential donor to engage with the charity offline (e.g., by encouraging a potential donor to contact the charity) or it establishes other contracts with the state using communications that direct a donor to its website.

The other area where state regulators have attempted to streamline the regulatory burden has been with multi-state filing initiatives. The first attempt to ease the multi-state filing burden was the Uniform Registration Statement. NASCO and the National Association of Attorneys General (NAAG) have developed the Unified Registration Statement (URS) in an attempt to streamline charitable registration and reporting requirements. All but three of the jurisdictions that regulate fundraising accept the URS as an alternative to the specific registration form required by each jurisdiction. While the URS can relieve some of the burden, note that it applies only to the registration requirement (not ongoing compliance obligations), many jurisdictions require supplemental forms, and the form is paper-based, not electronic. Much more information on this initiative can be found at www.multistatefiling.org. Also, 13 states have formed a pilot initiative in coordination with NASCO and NAAG to develop a single online portal through which to satisfy these multi-state registration and reporting requirements. More information on the so-called Single Portal Initiative can be found at www.mrfpinc.org. While progress on this initiative has not been as fast as one would hope, the initiative should be applauded. 

Cause-Related Marketing Regulation

Cause-related marketing solicitation activities often trigger registration and reporting obligations on the part of not only the charity, but also the for-profit business involved in the fundraising effort. Often called "commercial co-ventures" in the statutes of several states, charities and their for-profit partners need to stay on top of these requirements as state regulators are becoming more proactive in enforcing these once rarely enforced laws. A commercial co-venturer typically is defined as a party that is engaged in business for profit and who represents that some portion of purchase price of the good or service being sold will benefit a charitable organization or a charitable cause. To date, more than 20 states have some form of commercial co-venture regulation in place. The most typical forms of regulation include:

  • Registration on the part of the business (and the charity);
  • Submission of a written contract that outlines the arrangement between the business and the charity before the solicitation begins;
  • Disclosure of the arrangement in advertisements about the promotion;
  • Payment of a fee; and 
  • Reporting of the amount of funds that were received by charitable organizations as a result of the promotion.

Two states -- Maine and Massachusetts -- have even imposed a requirement that the business involved post a bond in order to engage in this activity. 

While these regulatory requirements can seem daunting, they should not discourage a business or a charity from pursuing new and effective avenues for supporting charitable causes. Keeping the following principles in mind when structuring a commercial co-venture or cause-related marketing initiative will help to keep the effort on track and in good standing:

  • Clearly describe the initiative to the public
  • Make sure that the benefit to the charity can be easily determined
  • Be transparent about the terms of the arrangement, including its duration and the fundraising goals for the charity
  • Share the good news regarding the success of the effort

Many for-profit business and charities have partnered successfully in promoting important causes while increasing the pool of financial resources available to charities and improving the bottom lines of businesses. The parties to these arrangements should be mindful of the regulatory landscape in place to protect the public and the causes served by these initiatives. While it may seem daunting at first, it is a very manageable cost of entering into what are often very mutually beneficial arrangements.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Nutter McClennen & Fish LLP | Attorney Advertising

Written by:

Nutter McClennen & Fish LLP

Nutter McClennen & Fish LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.