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Customer Support Ruling

   
 

Cooperative Mailings
UPDATED January 2006

PS-209 (703.1.6)

This Customer Support Ruling (CSR) discusses cooperative mailings and lists factors to consider in the determination of an eligible or ineligible cooperative mailing.

Domestic Mail Manual (DMM) 703.1.6.1 states that an organization authorized to mail at the Nonprofit Standard Mail (nonprofit) rates may mail only its own matter at those rates.  An organization may not delegate or lend the use of its authorization to mail at the nonprofit rates to any other person or organization.  The term "cooperative mailing" refers to a mailing made at the nonprofit rates in which one or more parties "cooperate" with the authorized nonprofit organization.  DMM 703.1.6.3 sets forth the applicable rules concerning cooperative mailings.

DMM 703.1.6.3 states that a cooperative mailing may be made at the nonprofit rates only when each of the cooperating organizations is individually authorized to mail at the nonprofit rates at the post office where the mailing is deposited.  Cooperative mailings made on behalf of, or produced for, any organization that is not authorized to mail at the nonprofit rates—ineligible cooperative mailings—must be paid at the applicable regular rates.

Under DMM rules, a mailing must be owned by the authorized nonprofit entity in order to be mailed at the nonprofit rates.  However, even if it is claimed that the mail matter itself is "owned" by the authorized entity, a mailing may not be sent at the nonprofit rates if made in conjunction with, or in support of, a venture of an unauthorized entity, or if a joint venture between authorized and unauthorized entities.

A mailing may be considered proper (not an ineligible cooperate mailing) if the authorized organization uses a for-profit entity (or other unauthorized entity) as an agent.  An example is the employment of a mailing house to presort and present nonprofit mailings to the post office on the authorized organization’s behalf.  However, if questioned, the parties must be able to show that the relationship is a legitimate principal/agent relationship, in order to use the nonprofit rates.

Typically, when a nonprofit and for-profit organization enter into a joint business venture, both parties put something in (e.g., a list of names and use of Nonprofit Standard Mail authorization by the authorized party and payment of printing and mailing costs by the unauthorized party) and both parties take something out (e.g., a share of the proceeds/profits).

Examination of a mailpiece usually is not sufficient to decide if a mailing is an ineligible cooperative mailing.  Instead, it is necessary to determine the relationship between all of the participating parties.  This requires a review of all contracts executed by the parties, as well as other documents that may demonstrate the relationship between the parties—e.g. memoranda, letters of understanding, or other written correspondence.  Provisions in these documents showing that the parties are not engaged in a joint venture or that the unauthorized party is the agent of the authorized nonprofit entity are relevant, but are not determinative evidence of the relationship between the parties.

Factors we may consider in determining whether a mailing is an ineligible cooperative mailing include the following:

  • the identity of the party (or parties) that devised, designed, prepared, and paid for the mailpiece;
  • the identity of the party that directly or indirectly paid the postage for the mailing;
  • how the unauthorized parties are compensated;
  • how the profits and revenues from the enterprise supported by the mailing are divided;
  • what risks are entailed in the enterprise supported by the mailing and whether the parties share the risks;
  • how managerial decisions are made concerning the content of the mailings or the enterprise it supports and who makes those decisions;
  • the contribution each party makes toward the enterprise supported by the mailing (e.g., money, service, managerial decision-making, etc.);
  • the intent and interests of the parties; and,
  • any other evidence that may be relevant to the standards discussed above.

While not limited to the above, evidence such as described in this CSR is generally useful in determining whether a relationship between parties is one of a legitimate principal/agent, or one that exists to benefit a party or parties not entitled to use Nonprofit Standard Mail rates.

 

(Signed)
Sherry Suggs
Manager
Mailing Standards
United States Postal Service
Washington DC 20260-3436