A new Cause Related Marketing law was recently passed by the Vermont Legislature and will affect Vermont nonprofit organizations who create partnerships with private entities to share in sales marketed on the charity’s behalf.
Sponsored by Representative Bill Botzow of Pownell, H. 730 requires companies that promise to contribute a portion of their product’s purchase price to charity to provide up-front information on how much money will actually be donated. The company must also retain records of their sales and contributions for public scrutiny.
This bill will affect any entity that “is regularly and primarily engaged in trade or commerce in this state other than connection with the raising of funds for charitable purposes”. This includes both private businesses and nonprofit organizations that have a designation other than 501(c)(3) (a chamber of commerce for instance).
Key provisions of the new Cause Related Marketing law:
- For applicable promotions, the amount per unit or percentage to be donated must now be clearly displayed at the point of sale as well as online.
- Marketers must also provide full contact information for the charitable organization which is to receive the donation.
- Crucially, the specific amount or percentage to be donated must now be displayed; in the past, marketers would be able to promise to donate “a percentage” versus “__ percentage” or dollars without demonstrating the fact. If there is a minimum or maximum (cap) amount that will benefit the charitable organization, that amount must also be made public by the marketer.
- Online, marketers must provide a description of the goods or services that are the subject of the promotion. If the total amount is based upon aggregate purchases or use, that amount and how it will be calculated must be disclosed.
- Marketers will also have to provide the date by which the benefit will be provided to the charitable organization or purpose.
- The marketer must disclose to the public if additional payments are being made in excess of the original amount for the use of the charitable organization’s name or logo in connection with the promotion. The charitable organization must disclose whether it has entered into an exclusive relationship with the marketer.
- Lastly, the marketer must keep records of promotion including the number of goods/services purchased or used and the dollar amount of the benefit provided to the charitable organization. These records must be kept for three years following the end of the promotion in question.