Your company just made a major announcement that it is partnering with a charity that you now find is involved in a scandal. What can you do?
The recent ousting of The Wounded Warriors Project CEO and COO amid allegations of lavish spending on travel, conferences and public relations requires a company to examine their cause marketing campaigns. While there is no need to throw the baby out with the bath water – recent studies still confirm that consumers, and in particular Millennials, strongly support buying from companies associated with a cause* — picking the right charity is critical.
*For example, according to the 2015 Cone Communications Millennial CSR Study, “More than nine-in-10 Millennials would switch brands to one associated with a cause (91% vs. 85% U.S. average).”
Practice tips:
- Investigate the charity before you partner. Websites like 1. www.charitynavigator.org, 1. www.charitywatch.org and 1. www.guidestar.org provide comprehensive research and financial information on charities.
- Put an “out” in your contract. Most commercial co-venture laws require a contract between the charity and the company. At the time of contracting, a company may want to consider a morals (ethics) clause, such as:“If Charity is accused of any act involving moral or ethical issues under any law, any act of moral turpitude, or any act which casts unfavorable light upon Company, Company shall have the right to terminate the contract, discontinue all advertising for the Program and/or cancel the Program, in its sole discretion.”
- Stop the promotion (if you can): The commercial co-venture laws are generally silent about whether a company has the right to terminate a promotion. If you filed a contract and filed registration forms, you are committing to conducting the promotion through the end date. If the charity’s problems are egregious enough that you must stop the promotion, you can consider informing the registration states that, pursuant to the terms of the contract (if applicable), your company is terminating the promotion and will stop all advertising.
- Stop all further advertising for the promotion. Most commercial co-venture laws (and advertising laws in general) prohibit deceptive advertising. Commercial co-venture laws require that all advertising include the end date of the promotion. Therefore, your company has to continue to make donations for all purchases through that advertised end-date. Pulling print-ads and labeled products may be difficult. But, a company may at least reduce any negative association with the charity by halting an additional advertising of the campaign.
- Make a press release?: A company may want to consider getting out in front of the scandal, but announcing that while it continues to have a commercial co-venture program, this program began without knowledge of, or before any public disclosures of, the scandal.
- Continue compliance with the commercial co-venture laws. Even though there has been a scandal, a company continues to have statutory obligations, including providing committed donations and accountings to the charity, and maintaining (and where required) filing financial information with states.
In sum, the commercial co-venture laws do not provide an easy out for a company when its partner charity is rocked with scandal. The seriousness of the scandal may dictate how aggressive a position the company may want to take. But the overriding message should be that cause marketing is an effective sales tool that should not be abandoned.
