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How Does Cause Marketing Work?

How Does Cause Marketing Work?

This article shows how business use cause marketing to enact social change and achieve business goals.

16th April 2020
Reading Time: 3 minutes

What is cause marketing?

Cause marketing is when a business aligns itself with a social cause to produce profitable and societal benefits. Cause marketing isn’t a new idea but has recently made a resurgence as consumers make more socially conscious purchases. This allows businesses to achieve their goals as well as make the world a better place.

It is important to note, cause marketing usually involves combining a for-profit brand with a non-for profit organisation for mutual benefit. On the other hand, it could also be including activist messages within a marketing campaign that aligns with a social cause. 

Legal requirements 

Understanding the legal requirements before starting a cause marketing strategy is necessary. This is because, within NSW financial penalties under the Charitable Fundraising Act 1991 (NSW) will apply for non-compliance. Therefore if a for-profit business wishes to engage in a cause marketing campaign or relationship with a charity you must do the following: 

  • If you wish to partner with another charity you must formulate a written agreement. This should outline details of any insurance risks covered by the parties and the amount of proceeds going to the charity.
  • You must receive a letter of authority from a charity to fundraise on their behalf. This charity you partner with must have a charitable fundraising license for authority to be granted. 

Laws change from state to state with some having tighter restrictions. For example within Victoria businesses that intend to fund-raise through a cause marketing campaign must register as a fundraiser. They must also meet the requirements set by the Consumer Affairs Victoria. Talking to a business lawyer is a great way to ensure the campaign you run complies with the right regulations. This will help you set out a legal agreement that outlines the rights and obligations of the charitable organisation and the company. 

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Misleading and deceptive conduct

Advertisements within a cause marketing campaign must not be misleading or deceptive toward the consumer. Australian Consumer Law prevents misleading or deceptive conduct while in the course of business. During a cause marketing campaign this could mean making false or misleading claims. For example claiming to donate 15% of profits for every pair of jeans sold when in reality its 5% is illegal.  Therefore all advertisements should include, the names of the business and the charity partner as well as how you intend to distribute funds. 

How to use cause marketing

Deciding on your cause 

It’s not only important to pick the right cause, but one that your company suits. Today consumers want the purchases they make to be a force for good. Businesses that align themselves with any cause for the sake of boosting public perception can lose consumer trust. Therefore picking a cause within an area that your company is involved in is a good place to start. One that is related to your brand will help staff buy into the concept. This will then help staff feel more passionate about their involvement and then later flow onto the consumers.

What message do you want to send 

Transparency between a company and its customers is critical. It’s important to address why and how your company wishes to help this cause. Consumers need to be able understand why a company is attached to a particular cause and not just for publicity. Figuring out your message and what your company stands for during this campaign is important before taking a cause on board. For example a surfing company could take a strong stance towards ocean pollution by removing certain plastics from its products. 

How can the customer participate 

Whether this is through donations of profits to a charity or donating a dollar for every share on social media. Making sure your campaign clearly sets out how your consumers can get involved will determine its success. The channel you chose needs to be accessible for consumers and in line with your brand’s image.

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

Phillip Salakas

Phillip is a legal Intern at Lawpath as part of the content team. Currently in his 4th year of a Bachelor of Laws at UTS, He is keen to learn more about how the legal industry is being shaped by the growth of legal technology.