The war in Ukraine has led to the worst refugee crisis in Europe since World War II; more than 3.5 million civilians have already been displaced, and some observers expect that number to rise to five million as the war continues to unfold. There has been an outpouring of concerned citizens around the world hoping to help provide aid, and a number of brands have launched “cause marketing” campaigns aimed at expressing their support for the Ukrainian cause and provide financial assistance to displaced persons.
It’s a great opportunity for brands to support an important cause, but marketers need to make sure they understand their legal obligations and risks when it comes to provoking marketing campaigns.
First, brands need to make sure their money is going to the right place. Unfortunately, charitable donation scams have become commonplace in recent years, with bad actors claiming to represent charitable causes raking in millions of dollars from unsuspecting donors. For example, between 2019 and 2020, the attorneys general of New York and California sent cease and desist letters to the Black Lives Matter Foundation, which had no involvement in the Black Lives Matter movement, but was seeking million dollars in donations. To ensure that donations go to legitimate charities, brands should seek to work with charities that are registered as 501(c)(3) charities with the federal government and have submitted the documents. required at the state level to solicit charitable contributions. Brands should also consult information published by the IRS and the Better Business Bureau, as well as websites such as Charity Navigator, to ensure that the charity is in no way suspicious.
Second, state laws impose a number of obligations on brands themselves regarding their charitable solicitation campaigns. A number of states have laws governing “business joint venturers,” or for-profit corporations that state that the sale of goods or services will benefit a charitable cause. These laws include specific requirements regarding the contract between the brand and the charity, as well as disclosure requirements for related advertising. Additionally, six states – Alabama, Hawaii, Illinois, Massachusetts, Mississippi and South Carolina – require the brand to register with the state and/or obtain a bond. While not complicated, these registrations can be time consuming and require at least a month lead time to ensure they are filed in a timely manner.
Third, marketing materials should describe the nature of the charitable program accurately and in detail. Among other things, brands must always disclose the amount of the donation, the identity of the charity, whether it will make a lump sum donation or base the donation on product sales, and any limitations on the offer. This information must always be clear and visible.
Brands have gotten themselves into hot water in the past for failing to properly disclose key limitations. For example, a 1999 General Mills charity sales promotion to benefit the Breast Cancer Research Foundation sparked an investigation by the Georgia Attorney General. The promotion involved General Mills’ pledge to donate 50 cents to the Breast Cancer Research Foundation for every Yoplait lid returned, up to $100,000. However, the $100,000 limit was only disclosed inside the lid, which was only visible to consumers after opening the product. Consumers actually returned 9.4 million lids – which would have meant a donation of $4.7 million – a number much larger than the $100,000 cap. General Mills avoided legal action by agreeing to donate an additional $63,000 to the Breast Cancer Research Foundation.
More recently, the National Advertising Division (the NAD) launched investigations into advertising from Niantic (the maker of Pokemon Go) and DoorDash alleging the organizations are making large donations to organizations like Black Lives Matter and Black Developers. Initiative. The NAD found that the companies made all donations as promised and therefore declined to take action, but this example illustrates that charity marketing campaigns are scrutinized even when executed correctly.
- Cause marketing campaigns are a great way to leverage a brand’s marketing infrastructure to make a difference in the world, especially when the campaigns benefit such a tracked cause as the humanitarian crisis in Ukraine.
- By following all relevant laws and best practices, brands and marketers can ensure they have the greatest impact possible without legal or public relations issues distracting them from the important work they do. they accomplish.