Commercial Co-Ventures, CCV Filing and Cause Related Marketing
A Commercial Co-Venture (CCV) occurs when a for-profit business and a non-profit organization make an arrangement for a donation or some percentage of profit from the business’ sales go to the charity. This type of cause related marketing is regulated in almost half of the states in the U.S., and may require that the business complete some sort of CCV filing or registration in the state(s) where the transaction is taking place. This is in addition to any federal, state or local promotion laws that might govern the deal.
If you are a business looking into cause marketing, or a non-profit contemplating a deal with a business, you should each do the following:
- Put everything in writing.
Treat this arrangement as a business deal and put the specifics in a contract. Things to include in the agreement should probably include: who gets to review and approve any advertising or marketing materials, what should happen if either party experiences any sort of public relations problems, and how each party is expected to advertise the deal.
- Make sure you have a contingency plan.
Is there a plan in place should the sales be too low or higher than projected? What about if the campaign turns negative on social media and becomes a public relations problem? Make sure you identify who is responsible for what, and what happens should things go awry. Include this in your contract.
- Be transparent to your customers/donors.
Do not try to deceive your customers/donors on what exactly must be done to ensure the items purchased will result in a successful donation. You don’t want to lose any customers or donors because they thought they had to do something but later find out their purchase didn’t result in a the donation they wanted to make. You will want to draft and post terms and conditions of the offer so that the public can see exactly what they need to do, how much money is going to the charity, how their purchase will contribute, and what cap (if any) there is to the donation funds. Make sure you also define the start and end dates of the promotion and exactly what products or services are included in the program.
- Keep records.
Some states require that sales records and income received and donated be kept and filed after the promotion is over. A full transaction history should be available and kept by both the business and the non-profit.
- Last but not least: do your homework!
Make sure to do your research on laws and any CCV filing requirements in your state. Have a plan in place should you run into legal issues in terms of who is responsible for what (the business or the non-profit). This is especially important in states where CCV filing is required as some states require contracts and filing be completed before any marketing or sales eligible for the donation can take place. Violations of this could be grounds for fines or criminal action.
If you need help with CCV filing or CCV contracts, contact Marden-Kane and we can help!
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