With over $5 billion raised through customer donations at retail checkout counters, point-of-sale fundraising campaigns are a popular and effective way for companies to raise funds for their favorite charitable causes. Companies engaging in these campaigns should keep in mind these key legal considerations.
1. Have a written agreement governing the fundraising campaign.
A number of state charitable solicitation laws require anyone who solicits contributions on behalf of a charitable organization to have the written consent of the organization before doing so.
The agreement should confirm that the charity has granted permission (such as through a trademark license) to solicit contributions from the public on behalf of the charity. The agreement should outline any agreed-upon terms, and include the date(s) of the solicitations, the states where they will be conducted, and the timing of transferring the donations collected.
2. Comply with any applicable state charitable solicitation registration requirements.
Point-of-sale fundraising campaigns do not meet the general definition of a “commercial co-venturer” because the company is not advertising that sales of its products or services will trigger a donation to the charity. Rather, the company is simply inviting customers to donate their own money to support the charity. Companies conducting these types of campaigns are generally not subject to regulations applicable to paid fundraisers (which are regulated as “professional fundraisers” or “paid solicitors”) because the companies are typically conducting them on a voluntary and uncompensated basis.
While the company may not be required to register with any states to conduct a point-of-sale fundraising campaign, the charity for which the company is soliciting donations should be registered in all applicable states where the solicitations are taking place. If the company is inviting customers to donate at its retail stores nationwide, the charity benefiting from the promotion should be registered to solicit in all applicable states. About 38 states require charities to register to solicit charitable contributions. See this Charitable Solicitation Registration Filing Requirements Chart for a list of the states that require registration.
Find additional information on charitable solicitation registration and reporting requirements.
3. Provide clear and transparent solicitation disclosures.
Point-of-sale fundraising campaign materials should clearly disclose the name of the benefiting charitable organization, and additional relevant information, such as the organization’s logo, website, and mission statement.
If donations collected will support the charity’s overall charitable mission, the solicitation materials should not state or otherwise suggest that donations will be used for a more limited program purpose or impact. Be aware that gift restrictions can arise implicitly, such as when a donor responds to a solicitation request that states or implies that funds raised will be used for a specific purpose.
In some campaigns, donations are received by one charity, with the intention of being further distributed to one or more other charities based on some formula or methodology. For example, the initial donation may be going to a national charity, with funds raised being distributed as grants to other charities or local affiliates. When this type of multi-level campaign structure is used, solicitation disclosures should clearly communicate which organization the customer is actually donating to, and whether and how funds will be distributed to the other organizations.
The information provided above does not constitute legal advice and is not intended to substitute for legal counsel. Prepared by: Perlman & Perlman, LLP.
