Before wineries, craft breweries or distillers partner with a local or national charity to do some good, make sure you check your state’s co-venturer statutes and get properly registered if you have any intention of telling people about your beneficence. More that 40 states have commercial co-venturer statutes on the books that regulate the manner and method of advertising your partnership with a charity, not-for-profit, 501(c)(3), etc. The basic point of every law is to force one of the parties to register with the state, keep records, and ensure that the parties have an explicit written agreement detailing how and when payments transfer funds from you to the charity.
The key points to each state’s requirements are tricky, but some important pitfalls to watch out for:
- Some states require the commercial co-venturer and charitable organization to have a written contract with mandated terms and many states require that parties file the contract with the appropriate state agency.
- Most state laws explicitly require written advertisement disclosures including information on the per-unit donation amount of any goods sold, or require a statement of the gross proceeds or other remuneration that the charity is going to get.
- Many states have reporting mandates that call for annual filings with detailed information on the monies raised, disbursed and what the commercial half of the venture kept.
- There are states that require the parties to post a bond guaranteeing performance and deliver of the monies that get raised.
Following these laws in important, and getting it right on mediums like twitter and facebook is incredibly nuanced. A Yoplait promotion in 1999 brought investigation from the Georgia Attorney General’s office when after advertising that Yoplait would donate 50cents for every lid it received in the mail, it forgot to disclose that the promotion was limited to $100,000. When Yoplait received over 9.4 million lids, Yoplait’s owner, General Mills, forked over an extra $63,000 to the Breast Cancer Research Foundation to avoid legal action.
So what are some helpful tips for making sure that you’re doing good the state-sanctioned way:
- Have a written agreement that complies with the laws of each state where you’re running the promotion/charitable effort.
- Check the state statute to see fi you need to get a bond, whether you can state the donation amounts in terms of per-unit donations, whether you need to disclose a maximum donation amount, and if its too onerous, check to see if a less onerous alternative might be had by just making a flat donation.
- Make sure you have all the required disclosures for commercial co-venturer information.
- Don’t equivocate in the advertising, make sure nothing is misleading or confusing about the terms of the donation.
- Have accounting and inventory tracking systems that can accurately keep records about the relevant sales and maintain a proper accounting.