With the recent release of recommended practices for specific types and forms of cause marketing, the New York Attorney General (NY AG) has taken oversight of these “doing good” promotional activities to a new level. While the report on “pink ribbon” campaigns, Five Best Practices for Transparent Cause Marketing, was specific to breast cancer charities, the guidelines are broadly applicable to all cause-marketing efforts.

It All Started with a Few Questions

These types of promotions are intended to create goodwill for the company and generate income for a charity and are classified as “commercial co-ventures” under New York law. With an increase in cause marketing, questions have arisen about whether consumers are made aware of the relevant information in such promotions and whether the charities are actually receiving the benefits that consumers think they are.

In October 2011, National Breast Cancer Awareness month, the NY AG sent questionnaires to 40 charities and more than 130 companies asking for detailed information on cause marketing  — promotions during which the sale of a product or service is advertised to benefit a charitable cause. In this case, it was breast cancer awareness.
A Year Later, the Rules Are in Place

After analyzing responses to the questionnaire, in October 2012, the NY AG released the Best Practices. They appear to be intended as far-reaching reforms to the way in which some cause-marketing promotions are currently conducted.
While they have not been directly adopted into law, the guidelines contained in the Best Practices could be used by the NY AG and other state regulators to inform enforcement of general prohibitions against unfair and deceptive marketing as found in state mini-Federal Trade Commission (FTC) Acts. If used as benchmarks for advertising standards, the Best Practices could have far-reaching effects on how charities and companies conduct cause-marketing campaigns.

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MCB has over 60 years of experience working with not-for-profit organizations on their accounting, audit, tax and compliance needs. Contact Kathy Flaherty or Charles Deppe at 703.218.3600 or at information@mcb-cpa.com  for more information.

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