June 3, 1999 | Read Time: 5 minutes
Charity officials last week told state regulators that they have serious concerns about guidelines recommended by a group of attorneys general on marketing partnerships between businesses and non-profit groups.
The concerns were raised at a hearing held in New York to discuss a report issued by 16 states and the District of Columbia (The Chronicle, April 22). The report urged companies to add new disclosures to product packaging and advertising that display a charity’s name or logo.
The regulators said they were worried that charity marketing partnerships too often mislead the public into thinking that an endorsement has been made or that a product has been tested and found to be superior to competing brands when no such endorsement or superiority claim exists.
But many charity officials at the hearing here said that the suggested guidelines were unnecessarily burdensome and confusing. They also worried that the new guidelines could diminish what has been a lucrative form of non-profit support, adding that the proposal already has caused some companies to drop plans for charity marketing deals.
“It would be ironic and tragic if the effect of the recommendations was to confuse consumers and jeopardize programs that deliver significant benefits to the very public the attorneys general seek to protect,” said Myrl Weinberg, president of the National Health Council, which represents 44 national charities, including the American Cancer Society and the American Heart Association.
Scholars and representatives of public-interest groups, however, said they supported the guidelines. They warned non-profit groups that by allowing their names and logos to be used to promote for-profit goods and services, they would damage their credibility and integrity over the long run.
“The way I see it, these groups are selling their very souls,” said James T. Bennett, a professor of economics at George Mason University and a long-time critic of such partnerships.
In their report, the regulators said that the mere presence of a non-profit organization’s name and logo on product packaging or in advertising implies an endorsement.
To counter misperceptions, the report recommended that products and ads bearing a charity logo include a statement that says that the non-profit group does not endorse the product, unless a true endorsement exists. It also recommended that packaging and ads clearly state that a charity does not claim that a product is superior to competing brands, unless the charity has done its own research and testing to determine that one brand is indeed better than another.
Of particular concern to the regulators were deals in which charities agreed to give pharmaceutical companies and other businesses exclusive use of their names in exchange for a substantial fee. The regulators said the public was often unaware of such fees. The attorneys general also worried that by signing exclusive deals with companies, non-profit groups would be prevented from lending their names to products that turned out to be more effective.
For those reasons, the regulators suggested that non-profit groups avoid signing exclusive marketing deals with companies. In cases where such exclusive deals exist, the attorneys general said, the public should be told that information, as well as whether the charity received money for the exclusive deal.
Although the guidelines would not be binding, they would represent the states’ views on how such marketing deals should be structured to avoid legal challenges by the attorneys general.
Many non-profit groups, businesses, and consultants involved in such marketing arrangements said they supported at least some of the proposed guidelines. For example, the American Cancer Society said it agreed that advertising should disclose when a company pays for use of a charity name or logo.
Arthur B. Weissman, president of the non-profit environmental organization Green Seal, said non-profit groups that associate themselves with products without actually evaluating them undercut the credibility of groups such as his that conduct comprehensive certification programs. Green Seal certifies products as being safe for the environment.
But other groups said that the restrictions go too far and would have a “chilling effect” on companies’ participation in such partnerships.
Joseph Bergen, chief operating officer of the American Lung Association, told the regulators: “Since your report was issued, six corporations that we have been talking to about partnerships have backed off. That is money that is not available to us to carry out our mission.”
At the meeting, representatives of non-profit organizations challenged the assertion that the use of non-profit logos and names on products automatically implies an endorsement and a claim of product superiority.
Ms. Weinberg of the National Health Council said that requiring disclosures on packaging and advertising would only cause clutter and confuse consumers.
Bill Skura, senior vice-president of Liberty Richter, a New Jersey company that sells specialty foods, said he opposed having to add statements to marketing materials that would state that the charity lending its name or logo did not endorse a product or consider it superior to other brands. “Why should I spend money to put a negative spin on my products?” Mr. Skura asked. He said he had arranged a marketing partnership with Save the Children recently, but he abandoned it because of confusion and uncertainty about the views of state regulators.
At the hearing, the attorneys general said all comments they receive through June 24 would be taken into consideration when they write their final report. Comments should be addressed to Barbara W. Tuerkheimer, Assistant Attorney General, State of Wisconsin Department of Justice, P.O. Box 7857, Madison, Wis. 53707; fax (608) 267-2778; e-mail tuerkheimerbw@doj.state.wi.us.
