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Proposed Postal Rule Could Prove Disastrous for Fundraising

(May 21, 2004)  The United States Postal Service (USPS) has issued a proposed rule that would change dramatically the guidelines for sending charitable solicitations and force many charities to pay First-Class postage rates for their mail.

The purpose of the rule is to clarify the differences between a personalized Standard Mail piece and a personal First-Class mail piece. In general, handwritten or typewritten mail, mail closed against postal inspection, bills and statements must be mailed at First Class rates. Advertising mail, newsletters, flyers and solicitations for contributions can usually be sent at lower, Standard rates.

The proposed rule sets up a new 'exclusive purpose' test for advertising or fundraising that contains personal information. Under the proposal, personal information would only be permitted in letters where:

  • advertising and solicitation is the exclusive purpose of the letter, and
  • the personal information included in the letter is directly related to the advertising or solicitation and is used only to increase the effectiveness of the advertisement or solicitation.

The proposed rule no longer permits charities to distribute letters with dual purposes (e.g., education and fundraising) if it contains personal information about an individual (beyond name and address). If a nonprofit mailing piece is personalized beyond name and address, the purpose of the mailing must solely be for fundraising. Otherwise, it must be sent First Class, forcing the charity to incur additional costs as much as 20 cents per letter.

This change would be extremely burdensome for many charities that include educational materials with their solicitation letters. It would also be a difficult standard to enforce, as it could be argued that some educational material is critical for the solicitation activity so donors can understand why charities need the money.

In addition, the definition of 'personal information' under the proposal is any information specific to the addressee, which is also problematic. Prior giving history would probably be considered personal information, but would it also be considered as 'directly related to the solicitation,' thus allowing its use? Other information, such as donor level or group or references to previous correspondence, would run into similar issues.

Comments to the USPS are due by June 18, and AFP encourages all members to write a letter to the USPS encouraging it to revise the proposal. A copy of the request for comments by the USPS can be found by clicking on the Attachments section at the end of this article.

In addition, a sample letter is included below that members can use to create their own letter to send to the USPS.

Sample Letter

Your letter should focus on three points:

  • Who you are and how your organization uses the Nonprofit Standard Rate to further your mission. How much your organization spends on postage annually and what that amount represents in your budget. (For many mailers that figure represents one of the top expenditures faced every year.)
  • Use your own words and show exactly how this change would impact your mission. The USPS has expressed an interest in seeing sample mailpieces to show how you rely upon multiple use fundraising mailpieces.
  • Ask the USPS to support efforts that will address the personal/personalized issue without harming the nonprofit community's access to the preferred postal rate for multiple purposed fundraising and educational campaigns.

Address Letter to:

Sherry Freda, Manager, Mailing Standards, US Postal Service, 1735 N Lynn St, Room 3025, Arlington, VA 22209-6038

As [TITLE] of the [ORGANIZATION], I want to call your attention to a very serious problem. Under the proposed USPS rule of April 19, [ORGANIZATION] would not be able to use the preferred nonprofit postal rate to raise funds and disseminate information or share other important program-related materials to our constituents. [How do you use the mail?]

In this time of budget cuts and belt-tightening, the [ORGANIZATION] and other groups like us are more necessary than ever before. We rely upon the mail to raise funds to address our mission. A rule change that prohibits the use of Nonprofit Standard rates would severely hurt our programs and negatively impact the people we serve in [YOUR CITY] and throughout America.

In drafting the new rule, we are concerned that the USPS was not aware of how charities approach their mail campaigns. Nonprofit development campaigns usually serve multiple purposes -- to raise awareness, educate the public or to motivate action, for example. These multiple purpose appeals are often the only contact a donor has with a charity and may be the sole impetus for giving. This rule would prove extremely costly to charities because they would have to sort their mailings into education and fundraising categories, increasing expenses at a time when the public and donors are encouraging charities to be as cost-efficient as possible.

In addition, the proposed ruling flies in the face of AICPA SOP 98-2, which allow charities to allocate costs for a mailing jointly among program, fundraising and administrative expenses. In order to allocate costs jointly among program, fundraising and administrative expenses, this new rule dictates an exclusive purpose test that would prevent us from using any 'personal information' like a donor's contribution history or other relevant giving information in our multiple purpose campaigns -- or we must mail at the First-Class rates.

The new rule would harm the nonprofit community's access to the preferred postal rate for multiple purposed fundraising and educational campaigns. Please consider a revision that would protect nonprofit access to the preferred rates of nonprofits so that we may continue using the mail to further our good work.


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