Contracts - Practical tips from a charity perspective

Mayaz Rahman – Head of Corporate and TrustsHannah Daft - Business Development Manager

• Breast Cancer Awareness Month – key time for Cause Related Marketing

• Big business for both parties• Corporate partnerships ASDA, Debenhams,

Vanish, Pentel• Use the law to help protect your charity’s brand

Breast Cancer Campaign

"If I was giving a charity advice, I would say do not compromise your work or your principles and don't underestimate the power and importance of your brand, which might actually be more important than a product brand, even though it is a market leader".

(Business Community Partnerships: Fact or Fiction? Business Community Connections, 2001)

How to set up a contract

Risk • Brand fit/synergy• Does the company fit with the charity's

ethical policy• Does the company have 3 years of

annual accounts? • Exclusivities with current

partners/conflict of interest?

How to set up a contract

Expectations• What does the company expect the charity to

deliver? • What resource will the charity need to commit;

PR support, celebrities, social media strategy and other resource?

• Open and honest discussions from the outset• Setting a minimum value for the agreement

Negotiation •RRP - setting donation level per product•We request a minimum donation of the retail price from products sold – this serves to prevent cynicism from consumers and the media•VAT - the donation is viewed by HMRC as a payment for a marketing service, and therefore VAT has to be charged on donations received. This VAT is passed onto HMRC

How to set up a contract

Asking for a minimum •Assess ROI •How to say ‘no’, e.g. the charity has limited resource. Every partnership the charity enters into needs to maximise funds•Politely decline, offer alternatives, direct the enquirer to the charity’s donation site

Valuing your brand and not looking ‘greedy’

Other agreements

Regional Contracts • Company only operates in one area• No guarantee/licensing fee• Commits them to the activity, approval process,

legal wording and compliance, termination, payment terms, communications & marketing activities

• Can either allow or disallow use of our name and logo dependent on activity

When things don’t go to plan

Breaking contracts•The charity’s responsibility to ensure all necessary research and risk analysis has been undertaken prior to entering into an agreement •However:– Not all products will be successful i.e. stockists pull

out– Not all companies will pay agreed amounts on time– A company's activity may call them into disrepute

•Cost of initiating legal proceedings for non-payment is costly and unviable to redeem•Some may pay once threatened with legal action some the Charity will have to write-off as bad debt

• Key three things• Don’t underestimate the strength of your

brand, and the benefit this brings to the company

• Complete your due diligence to protect your brand before entering into the partnership

• Assess the ROI, will the partnership make effective use of the charity’s resource