Knowledge Leadership Weekly Insights

Given the proliferation of cause-related marketing campaigns (also referred to as “embedded giving”) and the resulting media coverage, it is no surprise that Senator Robert Menendez of New Jersey is introducing federal legislation that will require companies to inform consumers how their money is being used, as well as to notify nonprofits that their names are being associated with the campaign. A nonprofit’s implied endorsement of a product raises certain issues around deceptive advertising and marketing practices, and in fact, many states have existing disclosure regulations for such commercial co-venture promotions.

In general, an advertisement complies with these regulations if it includes the following items:

  • Name of commercial co-venturer
  • Name of charity(s) 
  • Percentage of money donated to the charity(s) 
  • Timeframe for the promotion 
  • Statement of charitable purpose
  • Maximum amount of donation (if applicable) 
  • Toll-free number for more information about the program and the charity

However, in states where these regulations do exist, they are often unenforced.  The recent open dialogue surrounding disclosure is critical to the evolution of cause, as it will continue to raise the bar for companies and nonprofits to develop more substantive, long-term programs that deeply impact a social issue.  Measurement and transparency are essential to encourage corporations and nonprofits to be more accountable, and uniform parameters will respect consumers’ sensibilities and ultimately increase their trust.  However, there is a fine line that must be acknowledged because unreasonable restrictions may dissuade well-meaning programs and impede the resulting benefits.

 

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