September 13, 2023

How does Change solve regulatory issues?

Discover the legal obligations of businesses engaged in commercial co-ventures, highlighting five key provisions essential for ensuring legal compliance, including registration, contractual requirements, detailed disclosures, recordkeeping, and reporting.

If you’re a business that sells products online and you work with a charity or nonprofit to help them raise money, you’re probably in a legal status known as a commercial co-venturer, or CCV.

If you want to run a series of logical tests to see if you are a CCV, check out this article.  

If you are a CCV….

You are subject to some rather strict regulations and potentially nasty fines and penalties for not being compliant.

What are the key provisions for ensuring your legal compliance? 

Five key provisions for compliant commercial co-ventures

1. You need to register

You need to register as a CCV in every state where you sell products and solicit donations. This includes states in which you sell online but don’t have a physical presence. 

You’ll need to detail each charity for which you solicit donations.

In some states, you must file with the Secretary of State before the start of any charitable sales promotions.

Your registration will involve filing forms about the details of your relationship with the nonprofit as well as paying registration fees.

2. You need to have a contract

You’ll need a written contract with the charity that includes specific contractual elements, such as:

  • Statement of the charitable purpose for the campaign
  • The goods or services to be offered
  • The geographic area in which the campaign will run
  • The basis upon which the charity's share will be paid
  • and more information depending on the state. 

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3. You need detailed disclosures

You’ll need to make sure that the advertising for your campaign clearly discloses the per-unit or percentage amount that will go to the charity.

There are specific rules for the disclosure documents.

A foundational principle is that consumers donating to a charity on your business’s site need to be disclosed in a manner which is equal to, or superior to, the material disclosures you are making on other business terms and conditions in the course of making a purchase.

4. You’ll need detailed recordkeeping 

You’ll need to maintain specific, detailed financial records of the campaign.

These records must be made available to the Secretary of State or Attorney General upon request.

Most states define the requirements in the detailed recordkeeping.

You should expect to keep detailed, third-party verifiable records which show:

  • The amount collected from consumers
  • The amount of expenses that were allocated for collections
  • The amount distributed to specific charities

5. You’ll need detailed reporting

You’ll need to submit a final accounting report to the Secretary of State or Attorney General and to the charity within a certain number of days (often 90 days, but it depends on the state) when the campaign is done.

This accounting report encompasses both the standard filing details and the entirety of the nonprofit campaign you were involved in.

Change offers a comprehensive regulatory compliance service so you can rest assured that you won’t run afoul of state regulations. 

Learn more about how Change can help you avoid fines and regulatory actions by scheduling a demo here.

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