U.S. Senator Seeks to Regulate Corporate-Charity Promotions
A U.S. Senator is attempting to regulate charitable promotions by companies that promise to give part of the proceeds from a purchase to a particular charity.
But some observers say a bill he proposed to oversee these promotions has been poorly researched and steps on the toes of state regulators.
Sen. Robert Menendez, a New Jersey Democrat, last month proposed a bill that would require companies to reach agreements with charities on how their names will be used and how much money they will receive before using it in promotions, and to inform consumers how much money will go to charity.
The Federal Trade Commission would be told to enforce the agreements.
“Charity should never be used solely as a sales pitch,” Mr. Menendez said in announcing the bill. “When consumers open their wallets, they should have the comfort of knowing that their good intentions will be protected and that their donations will benefit the intended cause.”
The bill has earned praise from some charity leaders, who say that poorly constructed marketing arrangements hurt the credibility of other, more legitimate efforts.
But Jack Siegel, a Chicago lawyer and the author of the blog Charity Governance, questions whether such a law is needed.
“If Senator Menendez thought federal regulation was in order, he should have first undertaken a comprehensive survey of state requirements,” Mr. Siegel writes. “We see no evidence that he undertook such a study. From such efforts, he should have drafted a comprehensive regulatory solution, and then eliminated what is essentially duplicative state compliance burden.”
Others, however, say such regulation is needed as corporate-charity marketing deals becomes more commonplace.
Kandy Ferree, president of the National AIDS Fund, which has engaged in several marketing promotions with companies, says it’s a good idea to require companies and charities to inform customers how much money will go to charity, and to make sure charities have agreed to let their names be used in a promotion.
“It’s very important for anyone who participates in a campaign to understand what part of the money goes to charity,” Ms. Ferree says. “It’s absolutely critical that any company that wants to work with a charity inform the charity about their intent and develop a formal agreement. Our name is as important to us as any corporation’s name is to their business.”
But some observers say a bill he proposed to oversee these promotions has been poorly researched and steps on the toes of state regulators.
Sen. Robert Menendez, a New Jersey Democrat, last month proposed a bill that would require companies to reach agreements with charities on how their names will be used and how much money they will receive before using it in promotions, and to inform consumers how much money will go to charity.
The Federal Trade Commission would be told to enforce the agreements.
“Charity should never be used solely as a sales pitch,” Mr. Menendez said in announcing the bill. “When consumers open their wallets, they should have the comfort of knowing that their good intentions will be protected and that their donations will benefit the intended cause.”
The bill has earned praise from some charity leaders, who say that poorly constructed marketing arrangements hurt the credibility of other, more legitimate efforts.
But Jack Siegel, a Chicago lawyer and the author of the blog Charity Governance, questions whether such a law is needed.
“If Senator Menendez thought federal regulation was in order, he should have first undertaken a comprehensive survey of state requirements,” Mr. Siegel writes. “We see no evidence that he undertook such a study. From such efforts, he should have drafted a comprehensive regulatory solution, and then eliminated what is essentially duplicative state compliance burden.”
Others, however, say such regulation is needed as corporate-charity marketing deals becomes more commonplace.
Kandy Ferree, president of the National AIDS Fund, which has engaged in several marketing promotions with companies, says it’s a good idea to require companies and charities to inform customers how much money will go to charity, and to make sure charities have agreed to let their names be used in a promotion.
“It’s very important for anyone who participates in a campaign to understand what part of the money goes to charity,” Ms. Ferree says. “It’s absolutely critical that any company that wants to work with a charity inform the charity about their intent and develop a formal agreement. Our name is as important to us as any corporation’s name is to their business.”
Tags: charity
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