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.
A common way of helping charities and nonprofits is facilitating donations online, such as “rounding up” your purchase at checkout.
And it's a great thing!
Everyone benefits from donations – the cause, the donor, and the business that shows its customers it cares.
But some businesses have abused this method of donations.
They take donations and…keep them.
So, as always, a few bad apples have made it harder for everyone else.
That’s why there’s a raft of regulations and rules that are put in place that likely affect you.
Most of the rules relate to sales in specific states.
If you solicit donations from people in those states (including California and New York) through online sales, you are subject to the regulations in those states.
Who sells online and doesn’t sell to those states?
Well – no one, right?
So, if you are wondering if you are a CCV, here is a list of general characteristics that establish you as a CCV.
If you are in an agreement, written or verbal, formal or implied, between a commercial, for-profit entity and a nonprofit organization.
If you are working with a nonprofit to raise funds for a charitable cause supported by the nonprofit organization, including linking sales of the for-profit company's products or services to contributions to the nonprofit. This includes round-ups at checkout and percent-of-sale campaigns.
If you leverage the arrangement in your marketing efforts, promoting the fact that purchases will support a charitable cause.
If you operate in any of the 20+ states that require legal registration and compliance, including selling online to any customers in those states.
If you do any or all of these four things, you're a commercial co-venturer.
As you can see, the laws are written so that the majority of cases in which a for-profit company raises money for a charitable cause results in requiring a CCV registration.
So, what are the key provisions for you to be legally compliant?
1. Registration: You need to register your CCV – detailing each charity for which you solicit donations – with the Secretary of State before the start of any charitable sales promotion. This registration may involve filing certain forms and paying a fee.
2. Contract: You’ll need a written contract with the charity that includes specific elements, such as a 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.
3. Disclosure: 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.
4. Recordkeeping: You’ll need to maintain specific, detailed financial records of the campaign, and these records must be made available to the Secretary of State or Attorney General upon request.
5. 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.
If you are a commercial co-venturer, Change offers a comprehensive regulatory compliance service so you can rest assured that you won’t run afoul of state regulations and avoid fines and regulatory actions.
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