USPS Loosens Nonprofit Mailer Rule

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The U.S. Postal Service filed a final rule change in the Federal Register yesterday that will enable nonprofits to use for-profit fundraisers while still receiving the nonprofit rate.

The rule change is effective Nov. 13. It modifies the Cooperative Mail Rule, which was established in the 1970s and said that a mailer can't mail on behalf of another party using the nonprofit privileges of that party.

"Smaller nonprofit organizations will benefit from this rule change," said Steve Kearney, vice president, pricing and classification at the USPS. "Nonprofit organizations that lack resources or in-house expertise to carry out fundraising campaigns will now have more options in working with outside professional fundraising organizations without jeopardizing eligibility for Nonprofit Standard Mail rates."

Many mailers think the proposed rule is a good solution, allowing them to reduce their organization's risk and make the best deal possible for their charity without losing the use of their nonprofit permit.

The Direct Marketing Association's Nonprofit Federation said the decision would allow nonprofits to grow the potential pool of charitable donors at a time when the general economy is still faltering and public resources are being diverted to other priorities.

"Just like other enterprises, nonprofit organizations should be able to negotiate the best deal they can in the marketplace, and that is especially true in today's economic climate," said DMANF executive director Senny Boone. "Today's decision will help all charities, but especially emerging and small ones, find and retain donors."

Other mailers, however, have expressed concern that the proposal could lead to abuses by for-profit fundraising agencies. Small and unsophisticated nonprofit organizations, for example, can fall prey to one-sided and abusive arrangements.

"This new rule allows for a nonprofit mailer to enter into an agreement with a for-profit company, and the for-profit shares the risk and fronts the money," said Ellenor Kirkconnell, assistant director at the Alliance of Nonprofit Mailers, Washington. "If that's all they are doing, that's fine. But, what we have seen in the past is that some of these for-profits might be a little disreputable, and they might take more than their share."

The USPS said that it has responded to these concerns and has added protections for nonprofits. The agency, for example, will require that nonprofit organizations know who donated to their fundraising mailing and how much was collected, unless the nonprofit waives this condition.

The alliance said it plans to work with its members and the nonprofit community to inform them of the rule and the risks of working with for-profit groups. For example, it will encourage nonprofits to make sure they know who donated to their fundraising mailing and how much was collected.

The DMANF said it would release guidance to its members and plans to offer training and education to nonprofit organizations regarding this change.

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