The culture of philanthropy within large corporations has been ongoing for well over a century. Beneficent industrialists like Cornelius Vanderbilt donated significant funds to worthy causes as early as 1888, with a generous $250,000 going towards the YMCA, equating to approximately six trillion dollars in today’s currency.
Other major corporations in the U.S., including General Electric, Ford Motor Company, U.S. Steel, and Standard Oil, significantly contributed to the American Red Cross during its introductory fundraising campaigns during World War I, a period ironically labeled as the “War to End All Wars”.
However, we are now seeing an evolution in the model of corporate philanthropy. The classic model of direct donations being made to non-profit organizations is certainly still prevalent, but we are seeing an increased prevalence of creative giving strategies being deployed.
One popular method, which some are referring to as “Doing Well by Doing Good”, is the donation sweepstakes. But amongst the boardroom excitement that such an innovative strategy brings, it’s critical for corporations to fully consider its legal implications. Just exactly can we do that?
Although the implications may vary depending on jurisdiction, generally speaking, the legal framework surrounding sweepstakes and contests tends to be complex. Issues around the administration of the sweepstakes, including potential issues around gambling law, need to be addressed. Moreover, how the prize is awarded, who is eligible to participate, and many other regulatory details need to be considered.
Given the complexities and potential pitfalls, it is advisable for any corporation considering such a strategy to seek legal counsel. Consulting an experienced attorney with in-depth understanding of this particular area of law will help ensure that your corporation can continue its philanthropic endeavors in compliance with all relevant laws.
For further details discussing the intricacies of implementing donation sweepstakes as a corporate giving strategy, we recommend reading the article “The Donation Sweepstakes: Can We Do That?” by Verrill on JD Supra.