Often times, commercial entities will give to charity by donating a certain portion of sales to the charity. These “charitable sales promotions” are an effective tool for both parties, as it allows the commercial entity to promote its brand in a positive light and the charity to improve its ability to accomplish its stated mission.
The fifty states all regulate charitable solicitations in some manner, and it is not uncommon for those regulations to reach charitable sales promotions. Most states require that there be a written agreement in place between the charity and the commercial entity aka the commercial co-venturer (“CCV”). Other than there being a CCV agreement in place, however, state regulation varies wildly. Varying state regulations include, among other things: filing the CCV contract with the state, setting forth specific language for the CCV contract, mandating that the CCV provide the state with an accounting for the charitable sales promotion after its completion, registering (and paying a fee to do so) with the state’s charities department, and bond requirements.
Maine used to have one of the more onerous sets of regulations governing CCVs by requiring over $600.00 in licensing, application, and bond fees, and a bond requirement of $25,000.00. While these fees may not impact whether a national retailer decides to run a charitable sales promotion in Maine, they certainly could affect a smaller, more local operation from giving in a manner it may have otherwise chosen.
Maine recently completely changed course, however, by amending its law to exclude CCVs from ALL the previous requirements. The Maine legislature stated that, in sum, the bill “eliminates unnecessary regulation and document filing requirements while still retaining essential oversight of charitable organizations [and their fundraising practices].” The new law is set to go into effect on October 10, 2013.
Of course, other Maine laws prohibiting false advertising and unfair or deceptive business practices will still reach a CCV who falsely or deceptively misleads consumers about its charitable sales promotion. But, to the extent that certain, probably smaller, CCVs used to exclude Maine from participation in charitable sales promotions, it will no longer be necessary to do so.
Despite the clarity Maine is set to begin providing CCVs, there is no indication that this is the start if a national trend, and the other 49 states remain a hodgepodge of regulation. Accordingly, CCVs should be sure to seek the advice of counsel before commencing a charitable sales promotion in any state to ensure compliance with the applicable laws.