Customer Support Ruling

Authorization to Mail at Nonprofit Rates for Affiliated (Umbrella) Organizations
January 2006

PS-314 (703.1.6)

This Customer Support Ruling discusses the eligibility of an organization authorized to mail at the Nonprofit Standard Mail rates to enter mail on behalf of an integral department of the organization at those rates.

Under Domestic Mail Manual (DMM) 703.1.6, an organization authorized to mail at the Nonprofit Standard Mail (nonprofit) rates may mail only its own matter at those rates, including mail of any integral departments or parts of the organization. An authorized organization may not enter mail at the nonprofit rates on behalf of a separate or independent entity, unless that entity also is authorized to mail at the nonprofit rates at that post office.

Sometimes it is unclear whether a mailing at the nonprofit rates is being entered by or on behalf of an integral part of the authorized organization; or whether it is being entered on behalf of separate, independent entity, making it is ineligible for the nonprofit rates.  Examples of questionable entities include, but are not limited to, “departments,” “chapters,” and “affiliates” of the authorized nonprofit organization.

The determination whether an entity is an integral part of the authorized nonprofit organization must be based on the specific circumstances of each case. We must determine whether the entity is separately incorporated or if the entity has its own organizational documents, indicating it is a separate and distinct organization. For example, a “chapter” may be separately exempt from the payment of federal income tax by the Internal Revenue Service. Either of these factors is evidence that the entity is separate and distinct entity that is independent from the authorized nonprofit organization.

Application of these principles also may be demonstrated by considering mailings associated with universities and their alumni associations. Academic departments of the university, e.g. the math department, generally are integral parts of the university, thereby eligible to mail under the university’s nonprofit authorization (provided the mailpieces meet the identification requirements as prescribed by DMM 703.1.5). Similarly, in some instances, alumni associations are unincorporated and are authorized and created as an integral part of the university, thereby eligible to mail under the university’s nonprofit authorization. This is also may be true of some integral “chapters.” However, many alumni associations and chapters are separately incorporated and must obtain their own nonprofit authorizations to mail at nonprofit rates.

If an entity that is considered independent applies for its own authorization to mail at nonprofit rates, it must follow the application process required of other entities seeking to mail at those rates. Current postal policy allows a separate and distinct nonprofit organization, such as an incorporated chapter, to comply with the “evidence of nonprofit status” element by demonstrating that the chapter is covered by a “group” exemption from the payment of federal income tax issued to a national organization.

Separate and distinct entities that are not covered by a group exemption must apply for separate nonprofit authorization and must submit individual evidence of nonprofit status, such as:

• an exemption from the payment of federal income tax issued directly to the chapter or affiliate;
• an audited financial statement prepared by a responsible person, such as an independent certified public accountant, that demonstrates the organization is organized and operated as a nonprofit organization;
• or other documentation that provides evidence of the entity’s nonprofit status.

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