Summary of Report by Attorneys General on Charity-Business Marketing Deals

Following is the executive summary of “What’s In a Nonprofit’s Name?,” a report on marketing deals between charities

ALSO SEE:

16 Attorneys General Voice Concern Over Charity-Business Ad Deals

and companies that was issued this month by the attorneys general of 16 states and the District of Columbia

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The use of partnerships between commercial entities and non-profit organizations to market commercial products using the names and logos of the non-profit organizations is a growing trend that raises significant legal and policy concerns.

The Attorneys General of sixteen states and the District of Columbia Corporation Counsel, after consulting with numerous participants in such joint promotional campaigns, as well as with others, have produced this preliminary report as a first step towards a final report that will inform interested parties and the public about the consumer law standards and policy considerations applicable to such campaigns. The final report will be prepared following receipt of comments on this preliminary draft and other information from interested parties in a public forum to be scheduled in the near future.

Based upon their review to date, the Attorneys General believe that commercial-non-profit product advertisements often communicate the false and misleading messages that the products have been endorsed by the non-profit partner in the commercial-non-profit relationship and that such products are superior to other competing products. The Attorneys General are concerned that some promotions may further mislead the public about the effect consumers’ purchases may have on the level of charitable contributions the commercial sponsor will make. Additionally, such joint advertising campaigns using a respected non-profit’s name and logo often fail to provide important information consumers need in order to make informed choices, including the facts that the commercial sponsor has paid the non-profit organization for use of its name and logo and, as is often the case, that the relationship between the corporate sponsor and the non-profit is exclusive in nature.

In the recent past, the false or misleading nature of such messages has led to both state and federal law-enforcement actions, as well as private litigation. The Attorneys General hope that issuing this preliminary report to clarify the consumer law obligations incumbent upon the participants in commercial-non-profit relationships will obviate the need for future enforcement actions.

The Attorneys General have identified the following key principles in this important public protection area:

1) Both the commercial sponsor and the non-profit organization engaged in advertising a commercial product through use of the non-profit’s name or logo must satisfy all applicable legal standards, including compliance with consumer laws prohibiting false advertising, unfair and/or deceptive trade practices, and consumer fraud.

2) Advertisements for commercial products must not misrepresent that the non-profit organization has endorsed the advertised product. If such an advertisement uses a non-profit organization’s name or logo, and the non-profit has not in fact endorsed the advertised product, the advertisement must clearly and conspicuously disclose that the non-profit organization has not endorsed or recommended the product.

3) Advertisements for commercial products using the name or logo of a non-profit organization must avoid making express or implied claims that the advertised product is superior to others in the same product category, unless the claim is true and substantiated, and the non-profit has determined the advertised product to be superior to others in the same product category. If the non-profit has not determined the advertised product to be superior, the advertisement must clearly and conspicuously disclose that fact.

4) Advertisements for commercial products using the name or logo of a non-profit must disclose clearly and conspicuously that the corporate sponsor has paid for the use of the non-profit’s name or logo when that is the case.

5) Product advertisements arising from a commercial-non-profit relationship shall not mislead, deceive, or confuse the public about the effect of the consumer’s purchase on charitable contributions by the commercial sponsor.

6) Advertising partnerships between commercial and non-profit entities should avoid exclusive product sponsorships. However, in the case where an exclusive relationship exists, product advertisements using the name or logo of a non-profit should clearly and conspicuously disclose that fact.

The Attorneys General believe that adherence to these principles is in the public interest and will assist both the commercial and the non-profit entities engaged in product advertising in meeting their legal obligations. Implementing truth-in-advertising principles will benefit both partners alike, particularly as they seek to maintain the high levels of public trust and admiration that non-profit organizations have long enjoyed as a result of their valuable contributions to the health and welfare of our society.