Customer Support Ruling

Cooperative Mail Fundraising Exception

July 2009

 PS-333 (703.1.6)

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.       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.

b.       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.

c.       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:

1.        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.

2.        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.

(Signed)

Lizbeth Dobbins

Manager

Mailing Standards

Headquarters, US Postal Service

Washington DC  20268-3436