“For every 10 sold, one is donated to Group that Needs It!”
“10% of profits donated for Thing We All Care About!”
“Spend $10 and 45 cents goes to Non-Profit Who is Saving the Thing!”
Online, on social media, in grocery stores, and through the mail we are inundated with advertisements and promotional campaigns promising that consumer participation will trigger a donation to a charitable organization or purpose. As consumers, we are excited to see corporations and business entities stepping up to raise awareness and support causes we believe in. In a time of crisis, we see an increase in such campaigns. For example, COVID-19 has catalyzed a surge in such campaigns. Brands and corporations are marketing their products and services coupled with promised donations to frontline workers (thank you!) and vulnerable populations. Such campaigns are often referred to as Commercial Co-ventures or “CCVs.”
CCVs offer a win-win situation: increase in visibility and related uptick in sales for the brand AND a monetary or in-kind benefit to aid a charitable organization/purpose. However, an often overlooked issue in creating and implementing CCVs is understanding and complying with state laws and regulations. States have an interest in protecting their citizens from participating in campaigns that are misleading or fraudulent.
I want to run a CCV Campaign, what do I need to consider?
CCVs are an excellent way to engage your customer base by encouraging them to participate in a donation to organizations and causes they are passionate about. However, when considering moving forward with a CCV it is prudent to:
- Understand what qualifies as a CCV and whether your campaign would be considered as a CCV;
- Consider the geographical reach of your CCV which will inform where you need to conform with state laws and regulations as well as how much you may need to pay in fees;
- Build in time prior to campaign launch to meet regulatory requirements;
- Carefully consider the ability of a beneficiary organization to comply with state laws and regulations; and
- Speak with a legal professional about the scope of the CCV and how to meet your obligations.
What is a Commercial Co-venture?
A CCV is a form of “charitable solicitation,” generally defined as a request for a contribution on the representation that the contribution will be used for a charitable purpose or will go to a charitable organization. In other words, a direct or indirect request for a donation. Charitable solicitations are regulated in almost all 50 United States, and Washington D.C.
More specifically, a CCV is a charitable solicitation that is organized by a person or business entity that for profit or other consideration is regularly and primarily engaged in trade or commerce other than in connection with a charitable solicitation and who advertises that the purchase or use of their goods, services, entertainment, or any other thing of value normally sold without a charitable appeal will benefit a charitable organization or purpose. In other words, a campaign run by a company that is not in the charitable solicitation business, where a consumer action triggers a donation (buy this product and 10 cents goes to Saving the Thing!).
Traditionally, CCVs require a customer purchase to trigger a monetary or in kind (goods, services, etc…) donation. However, in some states, the language of the statutes and regulations are ambiguous and may include any request for consumer action that would result in a donation– such as retweeting, using a hashtag or liking a post, as a CCV.
How are CCVs Regulated?
Each state that regulates CCVs has its own system of regulation. Certain states require actions prior to, during and/or after the campaign to comply with regulation such as:
- Registration of Commercial Co-venturer: Filing and maintaining paperwork about the organization, its history, and relationship with the donation beneficiary prior to commencement of the campaign, which may or may not include filing fees;
- Registration of beneficiary organization: Filing and maintaining registration paperwork to be a part of a charitable solicitation within the state and also additional paperwork where required for a specific CCV;
- Written agreements and specific provisions therein: A written agreement between the Commercial Co-venturer and the donation beneficiary which may or may not need to be filed with the state and some states even require specific provisions, terms, and conditions within those agreements;
- Solicitation Notification: A notification document filed prior to commencement of the CCV;
- Bonds: Filing a bond prior to commencement of the CCV;
- Labeling Disclosures: Certain categories of information located in a clear and conspicuous manner when promoting a CCV; and
- Reporting: Annual and/or post-campaign documentation of funds raised and donated to the campaign’s beneficiary to be submitted to the beneficiary and/or the state, as well as specific document retention periods.
Failing to comply with state laws and regulations may result in violations of consumer fraud laws resulting in law suits or state actions/penalties.
If you have questions about Commercial Co-ventures or general advertising claims please contact any of the attorneys in our Advertising and Consumer Protection Group, including Zoë Sajor, Vic Westgate, Nico Lustig, Jonathan Rose, and Brian Dunkiel.
