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The Taxation of Cause-Related Marketing

74 Pages Posted: 8 May 2010 Last revised: 3 Jun 2010

Terri Lynn Helge

Texas A&M University School of Law

Date Written: May 8, 2010


With the economy in turmoil, charitable organizations are looking to nontraditional sources of financing to supplement contributions and fee-based revenues. One potentially lucrative source of revenue stems from cause-related marketing. Cause-related marketing is the public association of a for-profit company with a charitable organization to promote the company’s product or service in order to raise money for the charitable organization. Introduced almost twenty-five years ago, cause-related marketing has now become a $1 billion a year industry. Cause-related marketing has evolved beyond mere use of a charitable organization’s name to an apparent union for the purpose of promoting products that carry the charitable organization’s brand or message. While the academic literature discusses whether cause-related marketing alliances are ethically and socially desirable, it does not address whether the application of the federal income tax rules to cause-related marketing alliances adequately captures what we accept as valid charitable activities. Despite the widespread success of cause-related marketing, the IRS has issued little guidance on acceptable practices by charitable organizations engaged in cause-related marketing. An analysis of the application of the unrelated business income tax regime and the prohibition on private benefit to cause-related marketing alliances reveals that modifications to existing Internal Revenue Service guidance should be made based on social, economic and tax theory. This analysis concludes with a proposal for a framework within which such guidance should be considered.

Keywords: Charity, Charitable Organization, Cause Related Marketing, Unrelated Business Income, Private Benefit

Suggested Citation

Helge, Terri Lynn, The Taxation of Cause-Related Marketing (May 8, 2010). Chicago-Kent Law Review, Vol. 85, No. 3, pp. 101-174, 2010. Available at SSRN:

Terri Lynn Helge (Contact Author)

Texas A&M University School of Law ( email )

1515 Commerce St.
Fort Worth, TX 76102
United States


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