Legal Issues for Corporate
Fundraisers
14 November 2012
Speaker: Stephanie Biden
Partnerships
 not a legal partnership
 main forms – CRM (charity’s name
associated with business
services)
– Business sponsorship
(business name associated
with charity’s services)
Other forms
joint venture – separate legal entity
CRM
Typical Arrangements
 5p for every bar of soap sold ……..
 Bank affinity cards
 Retailer advertises staff fundraising
CRM
First Thoughts
 Logo is valuable asset
 Mutual benefit
 Be commercial (don’t undervalue)
 Reputation
 Suitable partner
 Due diligence
CRM
More thoughts
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Risk assessment
Ethical guidelines
Branding guidelines
Corporate will usually be a “commercial
participator”
What is a Commercial Participator?
Any person who:
a) carries on for a gain a business other
than a fund-raising business, but
b) in the course of that business, engages in
any promotional venture in the course of
which it is represented that charitable
contributions are to be given to or applied
for the benefit of a charitable institution.
Exception: charity trading subsidiaries
Commercial Participator
Where any representation that charitable
contributions are to be given to or applied for
the benefit of a charitable institution, the
representation shall be accompanied by a
statement clearly indicating:
 The name or names of the charities;
 If more than one, the proportions in which
the charities will benefit; and
 The notifiable amount of money paid for goods
or services which will be given to the charity;
 The notifiable amount of the proceeds of any
other promotional venture to be given to the
charity; or
 The notifiable amount of donations to be given
by the commercial participator to the charity.
The notifiable amount may be a total figure.
Commercial Participator Statement
Examples from OTS guidance
 [X%] of the purchase price will be donated to
[Charity]
 For each item sold £[
] will be donated to
[charity]
 Cabinet office guidance:
http://www.cabinetoffice.gov.uk/media/110668/amended%20
guidance%20final.pdf (now archived)
Grey Area – Payment via a Trading
Subsidiary
How should the statement be worded if the
commercial participator pays some or all of the
money via the charity’s trading subsidiary?
The requirement in the Act is to state the amount
the charity will receive.
BWB view: No requirement to refer to trading
subsidiary if the amount will go to the charity and
can be verified.
Penalties
 Criminal offences committed by the
commercial participator
 Weak enforcement
 Reputational issues for charity
CRM – Tax implications
 CRM = a commercial trade
 not primary purpose to trade in name/ logo
 Therefore, any profit will be taxed, unless it
falls within an exemption
 If not, use a trading company
 Supply is also subject to VAT, (special case
for banks & insurance companies)
CRM – Contract Issues
The basics
 What do you/they have to do
 How much is being paid
 Is VAT included
 What are the payment dates
 When does the contract run from and to
(some repeated below)
CRM – Contract Issues
The detail
 Who is commercial participator (full details)
- limited company?
- partnership?
- individual?
 Value of licence (don’t undercharge set policy
minimum?)
 Exclusivity
 Beware restrictions on what the funds raised can be
used for
CRM – Contract Issues
 What product/service is being sold? (n.b. dangers
endorsement or recommendation – vet statements)
 Insurance – e.g. TM infringement and product
liability
 Is there a minimum sum?
 Is there a maximum sum?
 When will sums be paid? (clear calculations,
payment methods, payment dates and penalties for
late payment)
CRM – Contract Issues
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How long will the relationship last? (start and finish dates)
Is there agreement for earlier termination?
Consequences of termination
No variation without agreement (see next slide)
does charity/trading company have to allow access to
database or can it have access to corporate’s database?
Who will have IP rights to use any revised or new database
or materials?
Branding guidelines?
Confidentiality
CP statement required by law
Business Sponsorship
Introduction: Sponsorship v Philanthropy
 Sponsorship = reverse of CRM
 Charity accepts payment
 Charity does something in return
 E.g. puts sponsor’s name/logo on materials or
gives hospitality benefits
 Beware mixed purpose
Business Sponsorship
Direct Tax Issues
 Profits do not derive from a primary purpose
trade, therefore taxable
 Consider size and place of sponsor’s logo
VAT issues for charity
 Simple acknowledgement = no VAT
 Placement of sponsor’s logo = VATable supply
 But remember one-off fundraising events
Contractual Sponsorship Issues
 Most of the contractual issues previously
discussed will apply
 Who owns the IP in materials produced (e.g. bank
sponsoring new materials on debt)
 How is charity to advertise the sponsor’s logo?
 Does the sponsor also want to advertise their
sponsorship: could they become a commercial
participator?
Stephanie Biden
Senior Associate
Charity & Social Enterprise Department
Bates Wells & Braithwaite London LLP
2 – 6 Cannon Street
London EC4M 6YH
Tel: 020 7551 7751
Fax: 020 7551 7800
Email: s.biden@bwbllp.com
Twitter: @StephanieBiden