News Updates Grumbles Over
DMANF Support Of New Postal Rules Recently revised United States Postal Service (USPS) cooperative mailing rules have sparked intense debate among direct marketing leaders. Though many Direct Marketing Association members supported the expansion of the cooperative mailing rules, including the DMA Nonprofit Federation (DMANF), concerns remained that the USPS did not go far enough. Moreover, some advisory council members voiced opinions privately that DMANF hadn't adequately consulted them before issuing a statement of support. USPS rule changes removed the exclusion of commercial fundraiser's use of nonprofit rates in cooperative mailings. The USPS added some protection for nonprofits in the regulations released Oct. 9 -- weeks later than expected. The rule requires that organizations know who donated to mailings and how much was collected. Nonprofits could waive this consideration. Regulations take effect Nov. 13. A day after the USPS released the regulations, the DMANF issued a statement voicing support and said it would offer nonprofits guidance and education on the new rules. It also supported USPS's offer to assist in the education process and address concerns if abuses arise. Some federation advisory council members said they felt blind-sided by the DMANF's announcement, and rumors spread that some might bail to another group. One federation member pointed out that the DMANF wasn't on the banner at the DMA convention in Orlando, Fla., calling it an example of how the DMA ignored the federation. With the annual conference approaching the DMANF was under pressure to get something out, said Kelly Browning, executive vice president and chief operating officer at the Washington, D.C.-based American Institute for Cancer Research. Browning sits on both the DMANF advisory council and the DMA board. "I think we could have spent some more time communicating within the federation about how the release should be worded, but in the long run, most people I've talked to are willing to move on," he said. Browning and Larry May, president and CEO of Direct Media in Greenwich, Conn., and a DMANF advisory council member, said they hadn't heard rumors that some members might leave the federation. A merger between the DMA Nonprofit Council and the National Federation of Nonprofits created DMANF in 2000. The marriage has not always been smooth. Senny Boone, executive director of DMANF said the statement was a reaction to what was released by the Postal Service. "It was intended to be precautionary to let nonprofits know we do need to educate. And also the fact is the Postal Service did not go as far as the umbrella organizations had hoped." Browning said in October he hadn't heard criticism that the DMA was ignoring the federation. "I know from the discussion that I've had this week that the federation is considered quite often in the overall policy structure of the DMA," he said. "When the federation merged in with DMA a couple years ago, we knew it was going to be a balancing act." He pointed to membership and conference attendance growth as signs it is doing an outstanding job providing services members want. May said the DMA's fundamental position is the exact correct one, "which is that they regret that the compromise position that the DMA and other organizations came to was not accepted by the Postal Service." The issue now is to go forward with that position, May said. "Everyone I've spoken to at DMA, on the board, in the general community, are in agreement about that." Opinions differed among DMA and DMANF members concerning compromises on list ownership and creative control and emerged during the trade group's annual conference last month. "I think many of us in the nonprofit sector were disappointed in the revised rule," said Max Hart, assistant to the executive director for fundraising at Cold Spring, Ky.-based Disabled American Veterans. Hart said he wished the USPS had addressed more precisely the issue of joint list ownership and how donations are handled. "We would have liked to have seen the Postal Service spell it out that the organization has ownership of the list and that all monies go to the organization," he said. May expressed disappointment that the USPS didn't accept nonprofit community consensus input on certain restrictions. May said the USPS recognized it isn't in a position to make evaluations about a nonprofit's relationship with suppliers. But the Postal Service's latest actions "essentially open the doors to all kinds of abuse" with no regulation to rely on if abuse occurs, he said. David Williams, president and CEO of Merkle Direct Marketing in Lanham, Md., supported the rule changes. He said the new rules are an opportunity for large consumer marketers and brands to better support effective world-class causes. Jerry Cerasale, senior vice president government affairs for the New York City-based DMA, called the rule a compromise, and acknowledged differences among DMA members. "It's not what we sent in and suggested, but it's better than the old rule," he said. A rule change was necessary and internal issues would get worked out, Cerasale said. The DMA decided, after USPS rejected several suggestions, that knowing who gave and how much was given were the most important items, Cerasale said. Neal Denton, executive director of the Alliance of Nonprofit Mailers (ANM) in Washington, D.C., said the Postal Service's decision to allow nonprofits the right to retain the list -- which it can waive if it wants -- was important. "In that sense it's a victory over their first proposal," he said. "I still fear that it's not enough. That it still leaves the door open." Benefit or hindrance? Another burning question was whether revised rules would benefit smaller charities or allow for-profit fundraisers to feast on their perceived lack of sophistication. Denton said he was disappointed the nonprofit community didn't unify around this issue. Fractures could prove problematic if mailing abuses arise. Denton said he wouldn't be surprised to see a legal battle eventually, and expects commercial fundraisers to be ready. "(One challenge) is going to be the resources required to fight this," he said. "We have seen now that large commercial fundraisers have sunk a lot of money into this fight. You can be sure they're prepared to take this to court. Their war chest will be substantial." ANM will watch mailings as much as it can "and see what goes on with the Postal Service's measurements of revenue and volumes," Denton said. If an influx of standard nonprofit mail happens, "we need to look at what's going out in the mail stream." Hart said the new rule jeopardizes small organizations. "I think the agency can still prey upon the small nonprofit organization," he said. Cerasale, however, said the revision would help smaller- and mid-sized nonprofits as they start out and expand their lists, adding the lack of shared-risk fundraising hurt a lot of smaller- and medium-sized charities, which was a reason for change. He bristled at the notion that the DMA didn't represent many so-called small organizations, but expressed hope to recruit more in the future. It's important to remove barriers of entry for start-up organizations, Cerasale said. "If you can't use the nonprofit postal rates because you just started up, and you can't share the risk, and you don't have money up front to pay the fundraiser, you're virtually left out and barred," he said. Charities beware Hart, who has held many positions at the DMA including stints on the board and ethics committee, warned nonprofits to be wary of provisions that give an agency sole rights to a donor file. He recommended careful review of any joint ownership provisions. If the contract is terminated, the organization should have rights to its list and take it with them so they're not locked into the agency. "I don't have any problem with an organization advancing credit in order to get a smaller organization started, but they should be paid as the funds come in," he said. "I really don't have a problem with list rental income being used to offset that debt. But certainly they're hurt if they don't have rights or ownership of their list. I'm not sure the (revised) cooperative mail rule addressed the total issue." Boone said DMANF's guidance would be similar to the suggestions it and other umbrella groups offered the USPS. At press time the federation had not yet released its guidance, expected before the end of October. Boone said the federation was actively discussing how to educate nonprofits on the changes. "We're likely to have a seminar to walk through the new regulations and what they mean for nonprofit organizations that mail at the preferred mailing rates," she said. "This will be ongoing."
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