Is Your Business Donating Goods or Services to COVID-19 Relief Efforts?
There has been a significant uptick in businesses contributing to COVID-19 relief efforts. One of the most important developments is companies retooling their operations to make new products such as face masks, shields and other items to contribute to the dire need for personal protective equipment (PPE). Some of these companies are offering to donate some portion of the product, often based on product sales (e.g., if a private consumer buys a face mask, the company will donate a face mask to a high-risk person or a person in need). Similarly, companies that make products that are in higher demand (comfortable shoes, scrubs, socks) for essential workers are also contributing their products.
Understandably, companies are eager to publicize these efforts to get their products to those in need. The efforts also may engender good will toward the companies in a tenuous time for businesses.
Depending on the structure of the donations, companies may be engaging in a commercial coventure without realizing that they are doing so. Commercial coventures, also called charitable sales promotions or cause marketing, are subject to state regulations. Failure to follow those regulations could cause companies to incur fines and harm their reputation. More information about these programs can be found here.
We are encouraged to see outreach to the community by many businesses during these trying times. If you believe you may be engaging in a commercial coventure, we encourage you to discuss your program with your legal counsel. Taft attorneys are happy to assist with these matters.
Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.
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