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Social impact and charitable organizations are increasingly partnering with for-profit companies to run charitable co-promotions, such as those bundling a donation with a purchase or those requesting that consumers contribute to a fundraising campaign. While the receiving organizations benefit from additional donations, sponsoring companies get the benefit of advancing their corporate social responsibility objectives. Many provinces have enacted related regulatory licensing, registration and disclosure requirements applicable to these co-promotions, which can apply to the receiving organization, sponsoring company and/or related service providers.
One of the key issues arises where a party is remunerated for participating in charitable fundraising. If a fundraising business is caught by these regulations, it can be subject to provincial licensing obligations, contractual and disclosure requirements and restrictions on permitted solicitations. Charitable organizations that work with fundraising businesses can also be similarly subject to provincial registration and additional compliance requirements and restrictions on their fundraising activities.
Another common issue arises where a sponsoring organization structures a promotion to be tied to the purchase of a product or service. While this is not prohibited, it triggers additional compliance obligations on the sponsoring company, notably contractual, record keeping and disclosure obligations. Care must also be taken to ensure that the donation structure and amount is clearly disclosed to participating consumers, particularly where there is a cap on the donation or other material limitations.
There are also potential risks when the recipient organization is not a federally-registered charity for the purposes of the Income Tax Act. In addition to the benefits of donating to a registered charity, sponsoring organizations may also wish to avoid the potential application of provincial registration requirements that can apply when fundraising for a charitable organization that is not federally-registered.
Depending on the roll-out of the charitable co-promotion, there may be other considerations to keep in mind. Often campaigns include a raffle or other activity that requires an authorization as a charitable lottery, or which should otherwise be structured to avoid these requirements. Some jurisdictions have enacted “safe street” legislation that prohibits aggressive solicitation, and many provinces have enacted requirements specific to the donation of food. Further, holding donations or other assets in trust can trigger additional complexity.
While these promotions can benefit all parties involved, there are a number of potential legal complexities and requirements to keep in mind when structuring these types of campaigns. Miller Thomson’s experts in marketing, advertising and social impact issues can help structure your next charitable co-promotion to avoid these unintended regulatory consequences, and make your next charitable co-promotion a success.