Charitable organizations will often partner with for-profit companies to offer special promotions that boost fundraising efforts, particularly around the holidays. While this is a smart strategy, there are legal requirements for these efforts. Here’s what your non-profit organization needs to know before entering one of these partnerships.
What Is a Charitable Sales Promotion?
Charitable sales promotions, also known as cause marketing, are marketing campaigns where a business advertises that a portion of their sales proceeds will be donated to a charitable organization. These promotions help raise funds for a good cause while also boosting sales and brand image for the business. Because of their unique nature, charitable sales promotions are regulated to ensure transparency and integrity in the process.
Legal Considerations for Charitable Sales Promotions
Supercharging fundraising efforts with the help of a commercial business can be beneficial, and while laws differ from state to state, keep these in mind:
- Contracts: Most states require there to be a written contract between the charitable organization and commercial co-venturer. The agreements should specify the terms of the promotion, including the duration, geographical scope, donation amounts, and any minimum or maximum contributions.
- Disclosures: At the point of solicitation, some states require that a clear and conspicuous disclosure be made to consumers. This includes the exact amount or percentage of the purchase price that will go to charity. For example, you must publish a statement like "From Dec 1-31, 10% of the purchase price will go to XYZ charity."
- Charity Registration: Your charitable organization must be registered with the appropriate state authority, which is the Secretary of State’s office in Oklahoma. This ensures that the charity is recognized and authorized to receive donations.
- Record Keeping: Depending on the state, both the charitable organization and the commercial co-venturer are typically required to maintain detailed records of the promotion for a set number of years. This includes amounts raised and paid to the charity.
- Financial Reporting: In some states, depending on the amount raised, detailed financial reporting to the state may be necessary. This helps maintain transparency about the funds raised under the guise of charitable causes.
If you’re considering a charitable sales promotion in Oklahoma, it’s important to consult with legal counsel to ensure compliance with all applicable laws and regulations. For more information or to set up a consultation, contact us.
