The Three Dirty Words A Company Involved in Cause Marketing Doesn’t Want to Hear

George Carlin had seven dirty words.  Spongebob Squarepants had 13 bad words (7 regular/6 sailor).  And New York State has 6,942 dirty words that can’t be used on vanity plates.  But commercial co-venturers should be aware of three dirty words: Professional Fundraiser, Professional Solicitor, and Fundraising Counsel, because if your cause marketing campaign drifts into these areas, you may want to scream another dirty word.

These categories are treated differently from commercial co-venturers under charitable solicitation laws because these people get paid for their fundraising activities and therefore, the state regulators are more cautious and have imposed much more stringent registration, bonding and reporting requirements. 

Professional Fundraisers.  Persons engaged on behalf of a charity to conduct a fundraising campaign in exchange for compensation or other consideration and (or) who have custody or control of the funds contributed.

Professional Solicitor.  Persons engaged by a professional fundraiser to solicit contributions on behalf of a charity in exchange for compensation or other consideration.

Fundraising Counsel.  Persons engaged to plan, consult or advise on a fundraising campaign on behalf of a charity for compensation or other consideration.

Charity employees, volunteers, and lawyers (because we write the laws) are usually excluded.

IMPORTANT NOTE:  These statutes are generally written broadly enough to include (a) when the company is not engaged directly by the charity (so long as on its behalf); (b) when the company does not receive compensation directly from the charity or from the donations received; and (c) when the company only receives “other consideration” which could conceivably include goodwill.

There are clearly situations that fall squarely within these categories – charity hires and pays company to send people door to door to collect donations – but there are more opaque situations that companies need to be aware of.  Here are a few examples:

  1. Co-operative Programs. Company arranges a benefit concert where all ticket sales will go to charity.  Charity pays the venue directly.  Company could be a professional fundraiser, since it’s soliciting funds for charity in return for “other consideration” (e., the benefit of not having to pay the venue.)  Company could also be fundraising counsel, since it planned the fundraising program on behalf of the charity in exchange for the other consideration.
  1. Website Donations. Company gives consumers a 10% discount for online purchases of certain goods.  This discount can either be in the form of a coupon for future purchases or a donation to charity.  Company contracted with a number of charities to participate.  Company also contracted with its suppliers to obtain a wholesale discount on the goods.  Company could be a professional fundraiser or fundraising counsel, since it conducted the program on behalf of the charity, held the donations, and received “other consideration” in the form of a wholesale discount on the goods sold.
  1. Product Donations. Manufacturer donates branded coffee mugs to charity for manufacturer and charity to give out at events in return for the coffee drinkers’ contribution to charity.  Mugs say “Manufacturer is a Proud Sponsor of Charity.”  Manufacturer could be a professional fundraiser, since it’s conducting the campaign, holding the donations, and receiving “other consideration” in the form of goodwill (and perhaps increased sales of other products sold at the event).

Whenever a company embarks on a cause marketing campaign, it needs to consider not only whether it’s a commercial co-venturer but also whether it’s actions could be considered those of a professional fundraiser, professional solicitor or fundraising counsel.  The last thing you want is to have that “Oh, [insert dirty word]” moment when you receive a nastygram from a state regulator.

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