Accountability for Embedded Giving

Congress will consider legislation to regulate “embedded giving” practices by retailers.  Stephanie Strom, writing for the NYT, reports that Robert Menendez (D-NJ) will introduce the legislation next week.  An increasingly common practice, embedded giving provides a nice promotional tool for retailers.  The retailer tells consumers that a percentage of purchases will be donated to charity or perhaps that a specific amount will be donated for each item bought.  The problem has been that some programs don’t indicate the percentage or amount that will go to charity or even the charity that will benefit.  Some retailers don’t provide any after-the-fact accounting of the charitable contributions made as a result of the program.

New Jersey and New York, as well as some other states, already have state legislation requiring a retailer to provide details to the Attorney General or other state regulator before starting an embedded giving program  and then provide an accounting of the amount that went to charity after the program ends.  National legislation would provide uniform rules.

In his announcement last Friday, Menendez said, “We need to ensure that charity isn’t being used solely as a sales pitch.”  That’s a worthy goal, but the big problem, as with so much of nonprofit regulation, is enforcement.

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