How to Serve and Protect Your Nonprofit When Partnering With For-Profits
Whats more, cause-related marketing campaigns are subject to registration, contract and disclosure requirements in many states, and they often have potential federal tax implications on the beneficiary nonprofit as well. Its crucial when embarking on a marketing venture with a for-profit company that nonprofits realize whats at risk and take steps to protect themselves and their names.
In the Name of the LawIn rare cases, a nonprofit could risk litigation from disillusioned consumers for breach of duty. These lawsuits can be extremely costly and lengthy. Further, should conflict arise with the partner corporation, nonprofits risk costly lawsuits for breach of contract. Its prudent to think twice before entering into a contract with a corporation, no matter the sum, as potentially negative consequences could greatly outweigh benefits.
Cross ExaminationFirst and most importantly, its fundamental to thoroughly evaluate a potential for-profit partners reputation. Examine their record for telling the truth in ads, verify all statements and figures released to the press and check that in the past, allocation of funds has been as promised to partners and the public. Important considerations to revisit when entering into a potentially risky relationship with a corporation include the following.
- Ensure payment and uses of your name are on your terms. Promises should be in writing.
- Federal and state regulations may apply to cause-related marketing transactions. Ensure youre in compliance with all applicable laws. State laws may pose a particular challenge, as solicitation campaigns must abide by the laws in every state where funds will be raised.
- Check every deal you make with an accountant and an attorney.
- As the nonprofit, you bear most of the risk. For this reason, you should carefully consider the financial cost of the relationship and contact your insurance broker for risk transfer methods.
- Establish an organization-wide policy for cause-related marketing ventures, and build on it as your organization gains experience.
Serve and ProtectBeyond taking these preventive steps, its important to ensure youre properly covered should you become involved in litigation for breach of contract or breach of duty.
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