Mail Fundraising Exception
This Customer Support Ruling (CSR)
is a case study in the use of Nonprofit Standard Mail prices when mailing under
the “fundraising exception” to the cooperative mail rule.
Domestic Mail Manual
(DMM) 703.1.6.1 prescribes that an organization authorized
to mail at the Nonprofit Standard Mail prices may mail only its own matter at those
prices. An authorized organization may not delegate or lend the use of its authorization
to mail at the Nonprofit Standard Mail prices to any other person or organization.
DMM 703.1.6.2 prescribes that no person or organization
may mail, or cause to be mailed by contractual agreement or otherwise, any ineligible
matter at the Nonprofit Standard Mail prices.
DMM 703.1.6.3 prescribes that a cooperative mailing
is subject to the following:
A cooperative mailing may be made at the Nonprofit
Standard Mail prices only when each of the cooperating organizations is individually
authorized to mail at the Nonprofit Standard Mail prices at the Post Office where
the mailing is deposited.
A cooperative mailing involving the mailing of
any matter on behalf of or produced for an organization not itself authorized to
mail at the Nonprofit Standard Mail prices at the Post Office where the mailing
is deposited must be paid at the applicable regular Standard Mail prices. The mailer
may appeal the decision under 607.2.0.
Exception: The standard in 1.6.3b does not apply
to mailings by an organization authorized to mail at Nonprofit Standard Mail prices
when both of the following conditions are met:
Mailings must be soliciting monetary donations
to the authorized mailer and not promoting
or otherwise facilitating the sale or lease of any goods or services.
The organization authorized to mail at Nonprofit
Standard Mail prices is given a list of each donor, contact information (e.g., address,
telephone number) for each, and the amount of the donation (or waives in writing
the receipt of this list).
The Postal Service does not dictate the terms of relationships
between authorized nonprofit organizations and third parties. CSR PS-209 discusses
in some detail a number of factors such as shared risks, or profits that may contribute
to a finding that because of the relationship between the parties, a mailing may
be determined to be an improper cooperative mailing ineligible for the Nonprofit
Standard Mail prices.
The fundraising exception in 703.1.6.3c does not prevent
authorized nonprofit organizations from entering into the type of principal-agent
relationship with commercial fundraising organizations contemplated by the cooperative
mail rule, and discussed in PS-209. However, it does allow an authorized nonprofit
organization to consider other relationships to retain the services of a professional
fundraiser under limited circumstances.
In the case here, the authorized nonprofit organization
has entered into a contractual agreement with a professional fundraiser to design,
prepare, and mail solicitations for monetary donations to the authorized nonprofit
organization. The professional fundraiser is using its own list of potential donors
in the fundraising campaign. The terms of the agreement between the parties are
such that the professional fundraiser initially covers the costs associated with
the design, preparation, and postage costs associated with the mailings. The agreement
calls for the professional fundraiser to be reimbursed through funds raised as donations
from the fundraising campaign, with ten (10) percent of the proceeds (eight (8)
percent if the authorized nonprofit organization wishes to be given a list of each
donor, contact information (e.g., address, telephone number) for each, and the amount
of the donation received from each donor) going to the authorized nonprofit organization
and the remainder of the proceeds going to the professional fundraiser.
Under rules prior to the addition
of the fundraising exception, mailings under arrangements described above would
typically be found to be improper cooperative mailings for several reasons. First,
the commercial fundraiser appears to bear all of the “risk” associated with the
fundraising campaign since it initially covers the costs of the program with no
guarantee that donations will be sufficient to cover those costs thereby potentially
resulting in the professional fundraiser actually losing money. In a traditional
principal-agent relationship, the authorized nonprofit organization would be the
party at risk with an obligation to pay the fundraiser’s expenses whether sufficient
donations were received to cover its costs or not. Second, proceeds are divided
on a percentage basis creating an opportunity for both the authorized nonprofit
organization and the professional fundraiser to benefit greatly from the mailing
campaign should donations well above costs be received.
The mailings that are part of the
fundraising campaign described here are eligible for the Nonprofit Standard Mail
prices because 1) mailpieces were limited to solicitations for monetary donations
to the authorized nonprofit organization, 2) no promotional material or other advertising
for the sale or lease of any goods or services was included in any mailpiece, and
3) the authorized nonprofit organization “waived” in writing its contractual right
to be given a list of each donor, contact information for each, and the amount of
the donation received from each donor.