Times of national crisis tend to trigger an uptick in charitable solicitations and charitable giving. And for-profit businesses, including recognizable retail brands, want to do all they can to help as well. As the COVID-19 crisis unfolds, with its far-ranging economic and societal repercussions, many brands are engaging in coronavirus-related commercial co-venture (CCV) activities and cause marketing promotions, advertising to consumers that purchase or use of their product or service will benefit a charity or a charitable purpose.
Although the COVID-19 pandemic has resulted in a delayed federal income tax filing deadline, mortgage relief programs, and other types of suspended governmental requirements, the regulations applicable to charitable sales promotions and the commercial coventurers who carry them on remain fully in place. In some ways, compliance with these rules—particularly disclosure requirements—is more important than ever given the increased desire to act now and do good. There is no “pandemic exception” for compliance with states’ CCV laws, or state and federal truth‑in-advertising laws. Indeed, while states may accommodate reasonable filing or registration delays caused by COVID-related business interruptions and the FTC similarly has acknowledged the strain on all businesses right now, these regulators will also crack down on marketing abuses that take advantage of consumers’ generosity or fear during the pandemic. For brands wanting to capitalize on the moment, keep in mind the following basics when it comes to conducting a compliant campaign:
- Contract Requirements. Most states that regulate charitable sales promotions also require a commercial coventurer to obtain written consent from the charitable organization to be supported by the campaign prior to using that nonprofit’s name and marks. This requirement is critical, pandemic or no pandemic. A charity’s name and brand are valuable assets; just because a company plans to contribute to the charity as a result of the campaign does not mean that the charity’s reputation, logo, and other property can be used without its express approval. Because many states also require certain provisions to be included in contracts, entering into a properly structured agreement that also authorizes the CCV to use the charity’s name and marks is a must-have before launching any charitable sales promotion.
- Registration and Reporting. Of the states that impose affirmative filing obligations on CCVs, most require pre-campaign notices to be filed anywhere between 7 to 15 days prior to the commencement of the promotion. States have been slowly shifting to online filing systems and, while not all of them are fully web-based at this point, exceptions may be made during the pandemic that would allow CCVs to file certain forms by email where online filing isn’t yet an option. Given the logistical challenges of securing signatures from company officers on those forms during this time, these are certainly welcome exceptions. However, keep in mind that if your company is not already licensed as a CCV in the two states that require bonds (Alabama and Massachusetts), you should factor in the time necessary to secure those bonds—recognizing that insurers may be operating with similar work-from-home challenges.
- Disclosures. Adherence to state law requirements and industry best practices regarding disclosures is more important than ever for charitable sales promotions prompted by a public health emergency like the coronavirus. At a minimum, advertisers should disclose: the name of the CCV and benefitting charity, together with the charity’s contact information and mission; the dates of the campaign; and the actual or estimated amount per purchase (expressed as either a dollar or percentage amount) that will benefit the charity. When explaining the amount per purchase that will benefit the charity, vague statements like “all proceeds” or “net revenue” should be avoided, as these fail to adequately inform the public as to the true impact of their purchase. Moreover, to the extent there are restrictions or other conditions on the CCVs eventual donation—such as geographic limitations, minimum guaranteed donations, maximum possible donations or caps, promotional code requirements, etc.—those material terms should also be clearly and conspicuously disclosed.
The current public health emergency is in many ways nothing like the disasters to which companies have previously responded—things like hurricanes, tornadoes, wildfires, lions, tigers, and bears (oh, my). Still, then and now, the public is presented with a myriad of ways to feel and do good through their purchasing choices. Having appropriate disclosures and maintaining compliance with states’ charitable solicitation laws protects not only the public by informing them about the power of their purchasing, but the companies that are mobilizing their resources to help their communities and those most in need.
If you have any questions regarding how best to structure and promote a charitable sales promotion, please contact the authors or your regular Venable contact.