Cause Related Marketing refers to a marketing strategy where a company aligns itself with a social or environmental cause in order to promote its products or services. This strategy involves the company making a commitment to donate a portion of its profits or engage in other forms of support for the chosen cause. The legal implications of Cause Related Marketing primarily revolve around ensuring compliance with consumer protection laws, advertising regulations, and charitable solicitation laws. Companies engaging in Cause Related Marketing must accurately represent the nature and extent of their support for the cause, avoid deceptive or misleading advertising practices, and comply with any specific requirements imposed by charitable solicitation laws. Failure to comply with these legal obligations may result in legal action, fines, or reputational damage for the company.
Cause-related marketing (CRM) is a cooperative arrangement between a corporation and a non-profit organisation aimed at advancing the corporation’s sales while supporting the non-profit’s cause.
The term “cause-related marketing” was introduced by American Express in 1983 during its campaign to raise funds for the restoration of the Statue of Liberty. American Express pledged to donate one cent to the restoration fund every time a customer used its charge card. This initiative resulted in the Restoration Fund accumulating over $1.7 million, and American Express experienced a 27% increase in card usage. Research indicates that more than 9 out of 10 consumers are willing to switch brands to one associated with a good cause, assuming similar quality and pricing.
Non-profit organisations stand to gain from the increased fundraising and exposure that cause-related marketing (CRM) offers. However, it’s crucial to approach such partnerships with care, as they can impact the reputations of both parties. For instance, a noble cause might lose its value if consumers perceive the CRM as mere commercialism. For successful CRM examples, consider exploring resources like Selfish Giving. Another valuable reference is the book “Designing for the Greater Good: The Best in Cause-Related Marketing and Non-profit Design,” which features numerous campaign examples, 24 case studies, and insights into effective non-profit branding.
To identify and cultivate CRM opportunities, non-profits should broaden their research scope beyond traditional corporate giving avenues (such as corporate foundations or giving programmes) and engage directly with a company’s marketing department. While some companies may support smaller, lesser-known charities purely based on merit, most prefer established charities with a sizable supporter base and, increasingly, marketing expertise. Additionally, eBooks on corporate giving, like “Cause Marketing for Non-profits,” are available for borrowing through our digital collection on Overdrive.
Cause related marketing is a business strategy in which a company aligns itself with a charitable cause or social issue and promotes its products or services in a way that benefits the cause.
Yes, cause related marketing is legal as long as it complies with relevant advertising and consumer protection laws.
Legal considerations for cause related marketing include ensuring that the company accurately represents the amount or percentage of sales that will be donated to the cause, obtaining any necessary permissions or licences to use the charity’s name or logo, and complying with any relevant tax laws.
Using a charity’s logo in cause related marketing may require permission from the charity and should be done in accordance with any applicable trademark laws.
In some jurisdictions, there may be specific regulations governing cause related marketing, such as requirements for disclosure of the amount or percentage of sales that will be donated to the cause.
In some cases, a company may be able to claim tax deductions for donations made through cause related marketing, but this will depend on the specific tax laws in the relevant jurisdiction.
In some cases, a company may be held liable for the actions of the charity it partners with in cause related marketing, particularly if the company is actively involved in the charity’s activities or if the charity’s actions cause harm.
In some jurisdictions, there may be specific disclosure requirements for cause-related marketing, such as the need to clearly disclose the amount or percentage of sales that will be donated to the cause.
A company can ensure compliance with legal requirements in cause-related marketing by consulting with legal counsel, carefully reviewing and documenting its agreements with the charity, and accurately representing its charitable contributions in its marketing materials.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 28th April 2024.
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