It should be simple for small businesses to donate to charity, right?
After all the people behind the businesses generally just want to do some good, and make a difference. And charities need support!
When small businesses fundraise for good causes, nonprofits enjoy so much more than just monetary support.
✅It raises awareness,
✅gets more people involved,
✅and spreads the message of all the great things the charity does.
Businesses benefit from donating too. It's incredibly rewarding for the business - for commercial and personal reasons.
Giving makes everyone in the company feel good. Plus the business's goodwill often tempts new customers and leads to more sales.
But for the process between a charity and a business to run smoothly, they need a Commercial Participation Agreement.
What is a Commercial Participation Agreement?
A Commercial Participation Agreement (CPA) is a contract between a charity and a business and is needed when the business wants to raise money for the charity through their sales. It can be a bit of a headache, but it’s actually super important and part of charity fundraising law.*
Known as a ‘commercial participator’, a business needs a CPA if they:
- Donate money to charity and tells this to their customers, or
- Encourage sales of their products or services on the basis that some proceeds will go to charity.
The agreement is needed to ensure the charity receives the donation that the business pledges. It also keeps customers aware of what happens to their money after spending it with a company, knowing that part of it will help out a charity.
Why is a Commercial Participation Agreement important?
Sadly in the past, some businesses have taken advantage of charities. Before the CPA was law, they could publicise their fundraising efforts but keep the money tight within their pockets.
A CPA is vital for protection for both the charity and the small business. It makes sure the charity receives the money that is rightfully theirs. It also protects the reputation of both the charity and the business, as neither wants to be associated with an untrustworthy organisation.
What’s involved in a Commercial Participation Agreement?
A CPA sets out some basic terms for both parties to agree to. It usually includes:
- Information about the organisations and people involved
- Terms of the agreement
- Details about protection and privacy.
There can also be information about things like responsibility, monitoring, complaints, confidentiality and tax.
Do you need a Commercial Participation Agreement?
If a business, of any size, wants to donate to charity through the sales of their products and services and tell their customers about it, then legally they MUST have a Commercial Participation Agreement in place with each charity their businesses wishes to support.
The same applies for charities, when a a business wants to donate money to a charity through their sales and publicise it, the charity has to set up a CPA with that business.
When it gets tricky:
All donations are hugely appreciated by charities. However, the legal requirements for a CPA can be long and complicated. Documents can range from one to tens of pages!
Coordinating the CPA can be a challenging task for charities because of:
- The time it takes to set up a CPA for each business
- The cost of setting up a CPA, such as paying for a lawyer
- The due diligence involved in researching the background of the business
- Limited people and resources available.
For a small business who wants to do good, receiving a CPA can also be intimidating and off putting.
Also, the CPA can become a barrier for charities to receive these donations, as sometimes it costs more to set one up than the business will be able to donate - which makes giving in this way unsustainable for the charity.
How Work for Good streamlines the process.
At Work for Good, we think fundraising for charity through your business sales should be much easier than this.
Through our fundraising platform, small businesses can create their Commercial Participation Agreement via our easy to use donations form in a few minutes, without having to negotiate individual, long contracts with each charity they want to support. The Commercial Participation terms are written into our T&Cs, which both businesses and charities agree to when they sign up.
Within minutes a small business can set up their fundraiser for a cause they really care about, and have fun telling their customers, fans and followers all about the good they are doing!
Charities can receive donations and feel confident that they’re protected. And both can enjoy the benefits of small business donations minus the complex legal stuff!
Check out more about how we create Commercial Participation Agreements in our FAQs.
*This is the law in England, Wales and Scotland. Northern Ireland doesn’t have the same law, but it’s good practice for charities to follow the legal requirements of the rest of the UK.