Often times, commercial entities will give to charity by
donating a certain portion of sales to the charity. These
"charitable sales promotions" are an effective tool for
both parties, as it allows the commercial entity to promote its
brand in a positive light and the charity to improve its ability to
accomplish its stated mission.
The fifty states all regulate charitable solicitations in some
manner, and it is not uncommon for those regulations to reach
charitable sales promotions. Most states require that there be a
written agreement in place between the charity and the commercial
entity aka the commercial co-venturer ("CCV"). Other than
there being a CCV agreement in place, however, state regulation
varies wildly. Varying state regulations include, among other
things: filing the CCV contract with the state, setting forth
specific language for the CCV contract, mandating that the CCV
provide the state with an accounting for the charitable sales
promotion after its completion, registering (and paying a fee to do
so) with the state's charities department, and bond
requirements.
Maine used to have one of the more onerous sets of regulations
governing CCVs by requiring over $600.00 in licensing, application,
and bond fees, and a bond requirement of $25,000.00. While these
fees may not impact whether a national retailer decides to run a
charitable sales promotion in Maine, they certainly could affect a
smaller, more local operation from giving in a manner it may have
otherwise chosen.
Maine recently completely changed course, however, by amending its
law to exclude CCVs from ALL the previous requirements. The Maine
legislature stated that, in sum, the bill "eliminates
unnecessary regulation and document filing requirements while still
retaining essential oversight of charitable organizations [and
their fundraising practices]." The new law is set to go into
effect on October 10, 2013.
Of course, other Maine laws prohibiting false advertising and
unfair or deceptive business practices will still reach a CCV who
falsely or deceptively misleads consumers about its charitable
sales promotion. But, to the extent that certain, probably smaller,
CCVs used to exclude Maine from participation in charitable sales
promotions, it will no longer be necessary to do so.
Despite the clarity Maine is set to begin providing CCVs, there is
no indication that this is the start if a national trend, and the
other 49 states remain a hodgepodge of regulation. Accordingly,
CCVs should be sure to seek the advice of counsel before commencing
a charitable sales promotion in any state to ensure compliance with
the applicable laws.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.