cause marketing and licensing

MUTUAL BENEFIT Cause marketing refers to a for-profit business and a nonprofit organization partnering for mutual benefit. It provides a mechanism to engage a brand’s shoppers/consumers to contribute to the impact of a partnership through their donations, and allows partners to feature a call to action that will further the nonprofit’s mission.

Cause marketing allows partners to leverage Habitat’s brand to engage consumers in their broader partnership story and can help achieve their business goals, such as differentiation from competitors or increases in sales or consumer loyalty.

Different contractual obligations and messaging guidelines apply to such efforts. These types of cause marketing or licensing efforts entail legal agreements separate from the overall partnership agreements, to address all regulatory requirements.

In cause marketing and licensing efforts, Habitat follows the messaging guidelines of the IRS, InterAction and the Better Business Bureau’s Standard 19.

BETTER BUSINESS BUREAU STANDARD 19 The Better Business Bureau developed Standard 19 out of concerns that some cause-related marketing promotions left consumers unclear on the relationship between their activity — purchase, coupon redemption, website click, etc. — and a company’s donation.

Standard 19 instructs cause marketers to clearly disclose how the nonprofit benefits from the sale of products or services that state or imply that a nonprofit will benefit from a consumer sale or transaction.

At the point of solicitation, such promotions should disclose: • The actual or anticipated portion of the purchase price that will benefit the nonprofit (e.g., 5 cents will be contributed to ABC Charity for every xyz company product sold). • The duration of the campaign (e.g., the month of October). • Any maximum or guaranteed minimum contribution amount (e.g., up to a maximum of $200,000). TIP: When a consumer can make a contribution by donating at the register, purchasing a product that includes a donation in its price or taking any other action that triggers a donation (such as “liking” on social media, sharing with a friend, watching a video, etc.), that is cause marketing.

A sample compliant disclosure statement might read: Five cents will go to ABC Charity for every box of XYZ Cereal sold in October up to a maximum of $200,000.

The donation may be expressed in monetary amounts or as a percentage of the purchase price.

If a number of items are involved (as in a catalog), the disclosure may be expressed as a range of amounts, such as:

Depending upon the specific item purchased, approximately 5 to 10 percent of your purchase price will go to Charity ABC.

It is definitely noncompliant to make a vague disclosure indicating the charity will receive “proceeds,” “profits” or “net proceeds.”

Standard 19 also requires disclosure at the point of solicitation, such as: • Within the product advertisement. • On the product packaging. • On the product hangtag. • On a catalog order form.

BBB may place negative comments on a nonprofit’s BBB Charity Report if it finds it is not in compliance.