Cause-marketing Faces More Regulation

More regulation looms for cause-related marketing. Not surprising. As was the case with the misuse of pink ribbon logos on packaging in the 1990’s, it looks like green causes are next in line to be invoked, sometimes falsely or superficially as a promotional stunt. The NY Times reports that Senator Robert Menendez of New Jersey is proposing legislation that requires more complete disclosure on packaging and promotions for what he terms “imbedded giving” to reveal to the consumer the beneficiary cause and how much they are actually receiving. So far so good.

While Federal regulation can be a bad thing, meaning it scares off otherwise well-meaning companies afraid they’ll mis-step on the regulations so they stay out of the arena all together. In this case case it bodes well. First of all, it marks a moment of maturity for a sector when the regulators move in. It’s a sign that there is enough activity, over a long enough period of time to warrant official guidelines. The coming of age for cause-marketing is hereby noted.

Secondly, as I discovered in thirteen years of advising both charities and corporate sponsors, both sides have been reluctant to enforce industry standards for communicating cause-marketing deals. Often for different reasons, but the outcome was the same, the consumer was left in the dark. Having a law will put teeth into marketing execution.

Most intriguing is the cultural phenomenon on the part of lawmakers to protect charities. This “virgin” effect fascinates me. Apparently, there is still a belief that charities are pure of heart, naive entities that require Federal protection. This despite the fact that CEO’s of some charities make salaries comensurate with or exceeding for-profits. Consider that the CEO of an international youth entrepreneurship cause makes over $600,000 per annum. So while charities have grown into big business in some cases, American mythology suggests there is something sacred about the charitable impulse that’s worth protecting.