Legal and finance concerns with deals

July 21, 2015       The NonProfit Times      

The popularity of cause marketing campaigns has caused them to increase in this country, and it has caused regulatory agencies to keep a close watch on them.

Nonprofit managers are concerned about raising money through such campaigns, not surprisingly, but at the 2015 Cause Marketing Forum, Terri Seligman of Frankfurt Kurnit Klein & Selz and Ed Chansky of Greenburg Taurig said that charities have many concerns other than just how much dough they have raised.

These concerns reflect both governmental scrutiny and the reputation of an organization or mission, and that must be kept in mind at all times. Among the concerns for nonprofits:

Maintaining their tax-exempt status (this is THE BIG ONE).

Unrelated Business Income tax (UBIT).

Self-dealing.

Registration, and the bureaucracy and costs associated with it.

Adequate contractual protection.

Disclosures, especially the BBB Wise Giving Alliance Standards for Charity Accountability standard #19, which includes the actual or anticipated portion of the purchase price that will benefit the charity, the duration of the campaign and any maximum or minimum contribution amount.

The contract, to include being economically fair, with adequate protection of intellectual property, provisions for review and approval, breach and termination.

No real ability to promote the for-profit entity.

NonProfit  Times
The Leading Business Publication For Nonprofit Management