If you’re from Nebraska, follow the College World Series (CWS), or simply watch the news, chances are you’ve heard of Rocco’s Jell-O Shot Challenge. Now a CWS tradition, the challenge pits fans against each other in a spirited competition to rack up the most Jell-O shots for their favorite team—all while raising money for a good cause. Last year’s CWS was a record-setting year, generating more than $145,000 in donations to food banks affiliated with the CWS participating schools as well as a local Omaha food pantry, simply from the sale of Jell-O shots. This year, Rocco’s upped the game by donating 40% of each Jell-O shot sale.

As Rocco’s demonstrates, many businesses seek to better their business and better their community by engaging in what is often referred to as “cause-related marketing.” This sort of marketing involves a collaboration between a for-profit business and non-profit entity. Businesses engage in this sort of activity with the goals of increasing profits and giving back to the community due to a sense of corporate social responsibility.

Although Rocco’s cause-related marketing tradition functions in Nebraska without much regulation, the same cannot be said for the majority of the country. This specific type of cause-related marketing and charitable fundraising is typically referred to as a commercial co-venture (CCV). The ability to boost sales while donating to charity is seen as a win-win to many businesses. However, it is important that a business carefully consider the steps necessary to make sure any such campaign is compliant with state laws and regulations. A business that operates a CCV without complying with a state’s specific CCV laws may face a variety of consequences, including monetary penalties and enforcement by that state’s attorney general. Therefore, it is critical that a business seek legal counsel to ensure proper compliance with applicable CCV laws and regulations.

CCVs are often conflated with, but are legally distinct from, other types of cause-related marketing and charitable solicitation. Charitable solicitations, and the laws that govern them, relate to requests made by businesses to donate or purchase something that will benefit a charity. For example, a local grocery store asking a customer to round up their bill at checkout, or a social media influencer donating a certain amount for every like on a particular post, are examples of charitable solicitations. CCVs are distinct from charitable solicitations in that, in the case of a CCV, a portion of the sale, whether a set dollar amount or percentage, will be donated to charity. Put another way, a CCV results in the donation being made with no extra cost to the consumer on top of the purchase.

Current laws governing CCVs are enacted and implemented at the state level. Approximately 26 states enforce some form of CCV regulation. Neither Nebraska nor Iowa have specific CCV laws or regulations, and businesses who sell and operate exclusively in those states need not take additional steps to operate a CCV. However, any business that conducts a CCV online, across state lines, or otherwise in other states will be required to comply with each state’s specific CCV laws in which the business operates.

No two states regulate CCVs in the same way, as each state has its own unique requirements. Despite their differences, state law requirements for CCVs generally fall into four categories: (1) written contract and agreement, (2) registration, (3) accounting and financial records, and (4) disclosure. States vary regarding which of these they require, with some states only regulating one of these categories and others maintaining regulations relating to all four categories.

1. Written Contract and Agreement. Many states require that, before engaging in a CCV, a business have a written agreement or written authorization from the applicable charity. State law requirements regarding this agreement vary, with some states requiring that the contract be filed with the attorney general’s office prior to beginning the CCV. This written agreement should include, among other things, signatures from charity officials and descriptions of the activity, such as the location of the offering and how donations will be used. Each state has different requirements regarding a written contract for a CCV, so consulting with an experienced attorney will help ensure there are no issues with any state’s attorney general.
2. Registration. A variety of states require the business to register the CCV before conducting any cause-marketing sales. Typically, CCVs must be registered on an annual basis, and businesses must file for renewal every year if they wish to maintain the campaign. In addition to the registration fee, several states require that CCVs post a bond with their registration.
3. Accounting and Financial Records. Many states require a CCV to maintain and report their financial and accounting records. Similar to written contracts, these records often must be reported to the state regulatory agency, such as the attorney general’s office.
4. Disclosure. Many states have enacted regulations regarding disclosures that must be made to consumers in marketing the CCV campaign. Each state is unique in what advertisements for the CCV must disclose to consumers. Ordinarily, states will require that both the charity and CCV’s information be included in any advertisement. Additionally, most states require that financial details about the campaign be disclosed, such as limits to or minimum donations to the charity, as well as the amount that will be donated to the charity with every purchase.

Although these are the general CCV requirements applicable in most states, each state may enact its own unique and individual regulatory framework. Enforcement is typically at the discretion of the attorney general, leading to differences in both the likelihood of enforcement and methodology of enforcement across states. To ensure compliance with the unique regulations of each state, businesses planning to operate a CCV should consult with legal counsel who can help navigate evolving laws and requirements.