On Black Friday 2021, one of the most popular shopping days of the year, Patagonia matched its sales with donations to organizations fighting climate change, resulting in a donation of $10 million to grassroots organizations over 17 days. This made headlines, made money–and also raised questions about substantiating advertising claims made in charitable contribution marketing campaigns. How much are organizations giving, how transparent are they about it, how transparent do they need to be, how do you substantiate claims of charitable giving, and who is regulating these claims? Ultimately, when measuring consumer perception and behavior and when does it amount to false advertisement in charitable giving?
With companies increasingly using charitable marketing campaigns, the way these promises are kept has come under scrutiny by the National Advertising Division of the Better Business Bureau (NAD). The NAD in early 2022 ruled that two claims related to charitable giving were substantiated. This post examines the burden for substantiating these types of claims and how the NAD may view survey evidence.
False Advertising in Charitable Giving or Charitable Claims Substantiation
Both claims were challenged not by a competitor, but by the NAD itself. One case involved food delivery service DoorDash, which claimed that: “We are donating $1 million, with $500,000 going to Black Lives Matter and $500,000 to create a fund to be directed by the Black@DoorDash ERG (Employee Resource Group) towards state and local organizations.” In the second case, NAD requested substantiation from Niantic, the company that makes video games Ingress and Pokémon Go, for various claims. In particular, NAD was interested in Niantic’s claim that it would donate a minimum of $5 million from proceeds from Pokémon GO Fest 2020 ticket sales, half of which would be used to fund new projects from Black gaming and AR creators for Niantic’s platform, and half of which would go to nonprofit organizations that help local communities rebuild. In both cases, NAD determined that the challenged advertising claims were substantiated.
The NAD decided to launch inquiries during routine monitoring, suggesting that it is interested in how well substantiated these charitable giving claims are. However, competitors could also raise objections to charitable giving claims, particularly if they believe the claims create an unfair advantage or constitute false advertising. MMR Strategy Group works with both nonprofits and corporations that use charitable donations as part of their marketing strategy. We can substantiate claims relating to charitable giving, conduct marketing research to measure how your audience responds to charitable giving, and act as expert witnesses if you come under legal or regulatory scrutiny for your giving. Contact us for a consultation.