May 29, 2003 | Read Time: 3 minutes
The U.S. Postal Service has proposed that charities and professional fund raisers be allowed to share the financial risk of sending direct-mail solicitations at nonprofit rates, causing consternation among some direct-mail experts and charity officials.
Currently, to be eligible to send appeals at nonprofit rates, charities must assume 100 percent of the financial risk incurred by sending the solicitation. An outside company can help prepare an appeal, however, as long as it’s clear the charity is the principal beneficiary of the mailing. The proposal does not cover mailings that advertise products or services.
The proposed change would allow professional fund raisers to cover a portion or all of the costs of a fund-raising mail appeal, and guarantee the charity a financial return. The appeals would be eligible to be mailed at the nonprofit standard rate. In issuing the proposal, the Postal Service said the change was needed because some small or new charities do not have the financial resources to pay for a fund-raising mailing. In addition, current rules conflict with laws in many states that require professional fund raisers to guarantee charities a financial return if their services were engaged to help raise money for the charity.
Kelly Browning, executive vice president for the American Institute for Cancer Research, in Washington, says the proposed change will save charities money. “My responsibilities as a nonprofit manager are: number one, make the best deal possible for my organization, and number two, lower my organization’s risk as much as I possibly can,” he says. The way the rule is written now, he says, “denies charities the opportunity to make the very best deal for themselves when they are working with a vendor.”
Critics say the change will cause an abuse of nonprofit standard mail rates.
“This could cause an explosion in nonprofit-preferred-rate mail growth that is fueled by commercial interests, which would put the preferred-rate privilege at risk for the rest of the nonprofit community,” says Neal Denton, executive director of the Alliance of Nonprofit Mailers in Washington, a coalition of nonprofit organizations. Currently, charities by law are entitled to mail at a discounted rate. Adds Mr. Denton: “The only thing that would ever put that in jeopardy is if Congress perceived widespread abuse of it, and I think the proposed rule puts us in that jeopardy.”
‘Lingering Fear’
Observers worry that letting professional fund raisers help pay for the cost of charity mailings could allow charities to be used for commercial benefit. “There is a lingering fear that removing all restraints in this territory will bring problems,” says Robert S. Tigner, a lawyer at the Direct Marketing Association’s Nonprofit Federation, in Washington.
In the proposal published in the May 6 Federal Register, the Postal Service acknowledges that shortcoming, but says curbing potential abuses is up to the federal and state legislatures, and also to those who work for or on behalf of nonprofit organizations.
The proposal can be found by going online to http://www.gpoaccess.gov/fr/index.html and typing in “page 23937.” Once the page appears, scroll down the listings to number 24, “Eligibility Requirements for Certain Nonprofit Standard Mail.”
