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Cause Related Marketing

Saturday, October 26, 2019 - by Stephen S. Mabry, CAE

Cause-related marketing (CRM) is a mutually beneficial collaboration between a corporation and a nonprofit designed to promote the former's sales and the latter's cause. American Express first coined the term in 1983 to describe its campaign to raise money for the Statue of Liberty's restoration.

The four principal kinds of alliance are transaction-based promotions, joint issue promotions, and licensing.

  1. Transaction-based promotions are probably the most common form of cause-related marketing alliance. In such an alliance, a corporation donates a specific amount of cash, food, or equipment in direct proportion to sales revenue—often up to some limit—to one or more nonprofits.
  2. Joint issue promotions are a second form of cause-related marketing alliance. In such a partnership, a corporation and one or more nonprofits agree to tackle a social problem through tactics such as distributing products and promotional materials, and advertising. Money may or may not pass between the corporation and the nonprofit.
  3. Licensing is a third kind of cause-related marketing alliance. In this structure, licensing of the names, logos or other intellectual property of the non-profit organization is issued to corporations in return for a fee or percentage of revenues. Licensing predates the emergence of cause-related marketing in the 1980s. Colleges and universities, for example, have licensed their names and logos for years. Other nonprofits are now adopting the tactic.
  4. Purchase Plus. Also called "point-of-purchase, this widespread campaign is waged at the checkout lines of grocery stores or other retail venues. Customers are encouraged to add a donation to their bill. The store processes the money and gives it to the nonprofit with which it has partnered. Promotion is usually pretty low-key, but that makes these programs easy to set up. Plus, they are quick so a business can respond to, say, a natural disaster in a timely way. One of the most successful cause-marketing programs, "checkout for charity" campaigns raised more than $388 million in 2014 and $3.88 billion over the past three decades
While a corporation is boosting its image and a nonprofit is securing crucial funds, both parties are also focusing attention on social problems that might otherwise be neglected. Cause-related marketing is about marketing, but it is also about finding new ways to improve people’s lives.

UBIT – CCV (Co-Commercial Venture) otherwise known as Cause Related Marketing

  • If a charity plays a wholly passive role, the funds it receives from the CCV should count as public support
  • If charity has a more active role and/or provides any “return benefit” to co-venturer (e.g., including the co-venturer’s name and logo on charity website in connection with the promotion), then UBIT may be triggered
  • In that case, structure as a qualified corporate sponsorship payment

Stephen is President and CEO of Texas Lions Camp, Inc. and recently celebrated 30 years of service to this 70 year-old, 501(c)(3) charitable, organization in August of 2019. TLC, Inc. has a large Board of Directors consisting of 94 voting members and over 300 volunteer members that serve on one of 10 standing committees. As a corporation, TLC has more than 200 full-time and seasonal employees (who are organized into 7 departments) and over 2,000 volunteers per year that are responsible for creating an atmosphere of success for more than 1,500 children with physical disabilities per summer. Stephen is a Certified Association Executive with the American Society of Association Executives, a past Certified Fund-Raising Executive with the Association of Fundraising Professionals. Stephen is a father of three and resides on TLC’s Kerrville campus together with his wife Shawn, who as luck would have it, is a professional editor.

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