Choosing which strategy to implement when marketing your business can be a tough decision. One common strategy is known as cause marketing. Cause marketing involves cooperation between a for-profit business and a not-for-profit organisation.

For example, a common cause marketing campaign is: “for every bottle of milk you purchase, we will donate 10 cents to charity”.

If you are thinking of conducting a cause marketing campaign, you need to be aware of the legal requirements in each Australian state and territory. This article will set out some of these requirements in New South Wales (NSW), Victoria (VIC) and the Australian Capital Territory (ACT).

Cause Marketing Regulations

New South Wales

In NSW, if your business is going to embark on a cause marketing campaign with a charity partner, you will need to:

  • enter into a written arrangement with the charity partner; and
  • receive a letter of authority from the charity partner to fundraise on their behalf.

There are a number of terms and conditions which the written arrangement between your business and the charity partner should include.

For example, it must detail the:

  • amount of proceeds going to the charity partner; and
  • details of any insurance risks to be covered by each party.

Any advertisement or information on the cause marketing campaign must include details of:

  • your business;
  • the charity partner; and
  • the intended distribution of funds that you raise.

Victoria

The laws surround cause marketing in VIC are much more stringent than in NSW. Under VIC laws, any person or organisation that undertakes fundraising must register as a fundraiser. So, if your business is wanting to conduct a cause marketing campaign, you will need to register it as a fundraiser.

However, if you are exempted, you do not need to register as a fundraiser. To be exempt, your business must:

  • receive less than $10,000 gross in a financial year from fundraising;
  • not be paid for conducting the fundraising; and
  • only use unpaid volunteers.

Even if your business is exempt from registration, you will still need to keep accurate financial records in relation to the fundraising appeal.

There are a number of requirements which you will need to provide when applying for a fundraiser registration with Consumer Affairs Victoria (CAV). You will need to have:

  • a physical place of business in VIC;
  • a letter of consent from the beneficiary (i.e. the charity);
  • details of the appeals manager (who must complete a criminal record and personal insolvency declaration); and
  • details of the bank accounts used for the particular fundraising activities.

Once you have registered your business, you will need to provide CAV with financial records related to the fundraising appeal. CAV may also impose specific conditions for the registration.

For example, they may require that your business distributes all of the fundraising proceeds by a specified time. This is to promote public confidence in fundraising and to protect the public from exploitation.

Australian Capital Territory

In the ACT, if you conduct a collection and don’t have a license to do so, you are committing an offence. An exception to this is where you do not have a license to conduct a collection, but you still are authorised to conduct a collection by a charity that:

Accordingly, one of the charitable organisations set out above can authorise your business to conduct a cause marketing campaign through a written agreement. But, they must provide Access Canberra or the ACNC with:

  • the contact details of your business; and
  • a copy of the written agreement between your business and the charity partner.

Unlike in NSW, you do not need to hold a letter of authority from the charity partner to fundraise on their behalf through the cause marketing campaign. A written agreement between your business and the charity partner is sufficient.

The Consequences of Non-Compliance

There are legal repercussions if you do not comply with the various laws in relation to undertaking a collection.

In NSW, if you conduct a fundraising appeal without a letter of authority from a charitable organisation to fundraise on their behalf, the penalty is $5,500.

The penalties are heftier in VIC. If you conduct a fundraising appeal without being first registered, the penalty is $38,685.60 for a corporation or $19,342.80 for an individual. You could also receive up to 12-months imprisonment.

In the ACT, if you conduct a collection without a licence or without authorisation from a charity, you could be fined $162,000 if you are a corporation. If you are an individual, you may receive a fine up to $32,000. You could also receive up to two years of imprisonment.

Misleading and Deceptive Conduct

You should also note that your business marketing endeavours may need to comply with the Australian Consumer Law (ACL). In particular, the ACL prohibits you from engaging in misleading or deceptive conduct when conducting your business. You must also not make false or misleading representations in relation to the supply of your goods or services.

For example, your cause marketing campaign says that “for every pair of shoes bought, we will donate 20% of the purchase price to children in need of education”. However, in reality, approximately 10% of this goes towards the cost of running the campaign. This statement is therefore likely to be misleading or deceptive.

Key Takeaways

Cause marketing is a marketing strategy that involves cooperation between a business and a not-for-profit organisation. If you intend to use cause marketing strategies to promote your business, you will need to ensure that you meet the requirements to do so in your relevant state. You will also need to be confident that the conduct of the cause marketing activity does not breach the ACL. If you need assistance in determining whether your marketing strategies are legally compliant, contact LegalVision’s marketing compliance lawyers on 1300 544 755 or fill out the form on this page.

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