Ads promoting charity donations fall under local, federal rules

Q&A with Rachel Blue

published in The Oklahoman | July 22, 2014

Disasters, public tragedies and charity drives often spur businesses to engage in cause-related marketing. In most instances, customers are typically encouraged to buy products in order to support a specific charity or cause. For example, a retailer may advertise, “Buy product X, and we’ll donation 5 percent to charity Y.” While such claims can often benefit both the company offering the product and the nonprofit organization, businesses should be aware that such advertising is subject to both state and federal law.

Intellectual property attorney Rachel Blue was interviewed by The Oklahoman about cause-related marketing and the various regulations surrounding such claims. She said that not only do most states have their commercial co-venture and deceptive advertising laws, but Federal Trade Commission regulations and federal tax laws also apply.

Truthfulness and transparency in cause-related marketing claims are important, said Blue. In most states, you must have a written contract with the charitable organization and disclose the per-unit donation amount as well as the beneficiary. Additionally, you can’t “surprise” a charity with a donation after the fact if you plan to use their name in advertising in order to promote a product or encourage donations.

“Using another’s name to help you sell something will always require their permission because it implies a connection or endorsement,” said Blue.