Cause-Related Marketing

• Pages: 181-188

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CHAPTER IX

CAUSE-RELATED MARKETING

A. Background

Cause-related marketing, or charitable promotions, can take many

forms but, at its core, it refers to the attempt of the marketer to appeal to

the consumer’s philanthropic sense. The goal is either to induce the

consumer to purchase a particular brand of product or, at a minimum, to

develop a positive image about a brand that has associated itself with a

charitable organization the consumer cares about. Examples of cause-

related marketing could include a retail store requesting customer

donations for a charitable organization at checkout, auctioning special

items online, sponsored walkathons, inviting consumers to “vote” for

charities to receive grants, and more.

In general, states regulate three types of actors in charitable

promotions. First, the charitable organizations are subject to registration

and other regulatory requirements when they conduct solicitations or

have solicitations conducted on their behalf. Second, professional

fundraisers, or those that conduct solicitations on behalf of a charitable

organization for compensation or other consideration, can be subject to

separate regulatory requirements. Finally, for-profit companies that

advertise that a purchase or use of its product will result in a charitable

donation could be subject to regulatory requirements as “commercial co-

venturers.” Each party has its own responsibilities with respect to

advertising disclosures and substantiation, in addition to other regulatory

responsibilities.

B. Regulation of Charities

Charities are subject to specific regulatory requirements when

conducting charitable solicitations. State laws generally define a

charitable organization to include a person or entity that is established, or

holding itself out as established, for a benevolent, educational,

philanthropic, humane, scientific, or eleemosynary purpose.1

1. UNIFORM TRUST CODE (UTC) § 405 (2010); RESTATEMENT (THIR D) OF

TRUSTS § 28 (2003).