Fundraising and cause-related marketing are among the most effective ways for nonprofits to raise needed financial resources. While fundraising generally involves the solicitation of tax-deductible donations, cause-related marketing is relationship between a for-profit business and a nonprofit organization from individual and corporate donors, to promote a social or charitable cause while also promoting the business product or service.

Cause-related marketing in particular is rising at a dramatic rate. According to the IEG Sponsorship Report, U.S. businesses will spend $1.57 billion on cause-related marketing in 2009, and the 2008 Cone Cause Evolution Study found that 79% of those surveyed would switch to a brand associated with a good cause, assuming price and quality are about equal.

However, both fundraising and cause-related marketing are subject to a complex collection of laws and restrictions. These include federal and state regulations on recordkeeping, reporting, and disclosure, as well as U.S. Postal Service restrictions on misleading or fraudulent direct mail and the misuse of nonprofit standard rate postal permits. State laws in particular pose a challenge as solicitation campaigns must abide by the laws in every state where funds will be raised. The failure to properly register and comply with all applicable state fundraising laws can result in costly fines and other penalties.

Perlman & Perlman has extensive experience in advising nonprofits to ensure compliance with the diverse federal, state, and postal regulations governing fundraising and cause-related marketing, including state-by-state requisite language for all fundraising solicitations. We will review a client’s fundraising strategies from a legal standpoint to ensure compliance as well as a business perspective to increase effectiveness.

Our Fundraising & Cause-Related Marketing Services include:

• Advising on the federal and state regulations affecting fundraising and cause-related marketing.
• Advising on registration and disclosure requirements for fundraising and cause-related marketing.
• Negotiating contracts between nonprofit and for-profit entities to ensure compliance with federal and state regulatory schemes.
• Registering commercial co-ventures in the states that require such registration.
• Preparing corporate and other documents allowing for-profit entities to fund charitable socially-responsible causes.