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News Update Uncooperative
Mail The United States Postal Service (USPS) has proposed a rule that would exempt some mail designed to solicit monetary donations from the guidelines set forth in its cooperative mail rule. There is little agreement as to whether this proposed rule helps or hurts nonprofits’ ability to use the lower rates in cooperation with a for-profit fundraising consultant. Document 39 CFR Part 111, Eligibility Requirements for Certain Nonprofit Standard Mail Matter, states that “...the proposed rule would not establish safeguards to address the concern that some professional fundraisers may seek to take advantage of unsophisticated clients.” The issue that is sticky is nonprofits working with legitimate for-profit fundraising counsel. The question is not whether the for-profit fundraiser can mail solicitations for the charity at the nonprofit rate. The issue is which party has control of what is raised, both the dollars and the very valuable names of donors. If the for-profit has control through a so-called “no risk” contract, then the mailing probably would not be eligible for the lower, preferred mailing rates. For nonprofits that have been working hard to create and comply with a set of ethical, self-policing-type standards, this rule could do great damage, according to Neal Denton, executive director of the Alliance of Nonprofit Mailers in Washington, D.C. “For some nonprofits out there that are looking for opportunities to engage a commercial fundraiser and their direct mail appeals, this isn’t necessarily bad news,” Denton explained. “For those of us whose goal is to protect the long-term viability of the preferred rate for nonprofits this is alarming news. This would open the door for unscrupulous abuses of the preferred rate by commercial entities that are disguising fundraising pieces as revenue generating enterprises.” Denton said that he believes that the USPS wanted to be helpful, but they just “screwed up.” There is a short window in place where the USPS will be accepting comments and suggestions and Denton added that nonprofits should take advantage of the time to repair the “gaping hole” that may be created by the proposed rule. “Let the Postal Service know that while you appreciate them trying to be helpful they might very well have kicked open the door for widespread abuses that would not be welcomed in our circles,” Denton said. “Can there be abuse? There can be abuse now,” said nonprofit and tax law specialist Errol Copilevitz of Copilevitz & Canter, LLC in Kansas City, Mo. “This doesn’t do anything to promote or make it easier for there to be abuse. The Post Office is there, the FTC is there, the IRS is there and the attorneys general are there. If the concern is that somebody is going to create a non-bonafide nonprofit and take advantage of this list, all four of those regulatory agencies have causes of action against them.” The proposed rule would help to bring down the cost of fundraising, a result Copilevitz said would benefit nonprofits and marketers that are caught in the current squeeze. He cited the example of Special Olympics, which when currently entering into a telemarketing contract must be given a break-even or a positive guaranteed return. As a result, Copilevitz explained, Special Olympics doesn’t get to use the nonprofit rate when they send out their fulfillment and reminders, thus increasing the cost of fundraising. But a bigger organization that does it in-house can send the same letters out at the lower rate, he added. “The other example is Reese Brothers, the telemarketing firm that really put Mothers Against Drunk Driving on the map. They were using the nonprofit rate for Mothers Against Drunk Driving and a number of their other clients. Because they had to comply with state law they wound up with an assessment from the post office of like $6 million. And it just doesn’t make any sense.” Nonprofits should know that it’s a proposal and not a final ruling and there will be a re-evaluation process, assured Jerome Lease, mailing standards, USPS. Lease advised nonprofits to look the proposal over and make comments that are in their best interests. It’s not unusual for proposals to be withdrawn, reissued and proposed second, third and fourth times depending on the comments received. “After the 30-day period we’ll be more familiar with the substance of those comments,” Lease said. “If we get 1,000 in favor and none against, I guess we’ll publish the final rule. If we get 1,000 against and none for, I guess we will withdraw the proposal. But anything in the middle has to be negotiated.” The possible illegal behavior by commercial organizations worries some more than others. “I think those in the nonprofit community have been attentive and concerned about this turf,” said Robert Tigner, regulatory counsel, The Direct Marketing Association (DMA) Nonprofit Federation in Washington, D.C. “Illegal activity is not what this is about in terms of a policy concern. The issue is more of fundraisers creating witting or unwitting captives out of nonprofits, creating degrees of control over the operations and fundraising campaigns that deprive nonprofits the freedom of movement.” By articulating distinct rules as they pertain to fundraising, the USPS could help erect additional protections to keep nonprofits out of those positions and, at the same time, protect the preferred rate, Tigner said. Joint ventures between nonprofits and commercial entities are not supposed to use the preferred rate. But the conclusion by the DMA Nonprofit Federation was that some restraints that would tend to inhibit joint ventures between fundraising consultants and nonprofits were appropriate and wouldn’t unnecessarily inhibit nonprofits in their work or fundraising, according to Tigner. And, it would not unnecessarily and unfairly inhibit fundraisers, he added. The USPS’s proposal has deviated from the hopes of the DMA. Tigner described the DMA’s reaction as disappointment that the USPS is contemplating vacating the territory altogether. Should it go through as currently stated, the rule will state that cooperative mailing prohibitions will not apply to fundraising arrangements. But, it would not abandon oversight regarding the preferred rate. The dilemma is deciding what to do about the proposed rule, Tigner said. The proposed rule has the benefit of taking wildly unpredictable decisions and rulings out of the lives of nonprofits which, in general, is a good thing, he said. “The political problem for nonprofits at the moment is, ‘Ok, we don’t think they did exactly the right thing but how aggressive are we going to be about this?’” Tigner said. “If we get aggressive enough and turn it into a political brouhaha about the Postal Service’s bailing out, and nonprofit fundraising going to hell because all of the sharks and the pirates are going to take over, we could have the result of kicking the thing back to the Hill (Congress). There you’d be rolling the dice and exposing people to who knows what kind of an outcome.” The proposed rule is available via the Federal Register’s Web site at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/03-11144.htm. Written comments will be accepted until June 5 and can be addressed to: Manager, Mailing Standards, U.S. Postal Service, 1735 N. Lynn St., Room 3025, Arlington, Va. 22209-6038. Copyright © 2006 The NonProfit Times. |
