AMEMORANDUM FOR: FSC MEMBERS AND FRIENDS

FROM: DICK DINGMAN

SUBJECT: Postal Service Hit List

DATE: OCTOBER 9, 2001

IF YOU ARE IN ANY WAY INVOLVED IN DIRECT MAIL FUND RAISING FOR NONPROFITS, YOU SHOULD READ THIS MEMO VERY CAREFULLY

ARE YOU ON THE POSTAL SERVICE HIT LIST?

Do you currently have - - or

Do you contemplate - - or

Have you had in the past - - a fund raising contract where the nonprofit did not bear 100 percent of the cost risk of a fund raising mailing?

For instance, did the nonprofit and its fund raising agency agree to a "no risk" contract for prospect mailings? Or for test mailings of some sort? Or, did you have an arrangement with a printer or writer which let the nonprofit fully (or even partly) off the financial hook if the mailings failed to meet expectations?

If so, look out! The Postal Service may be coming after you.

This means that universities, hospitals, museums and other nonprofits who might consider a "no-risk" contract with a fund raiser who is confident his lists, writing skills and packaging will produce for their cause, cannot do it.

This means that a fund raiser who wants to prove his skills at raising funds for a cause by doing a test mailing at no risk to the cause — cannot do it.

THE PROBLEM

The Postal Service already has levied a "postage deficiency assessment" of $3.8 million against one fund raiser which had a "no risk" contract with one or more charities. Other such "assessments" by the Postal Service may be in the works.

With the Postal Service running a defecit, they are looking for ways to collect more money. The next assessment could be against you.

How can they do that???

The Postal Service has perverted the long standing application of the Cooperative Mailing Rule which forbids nonprofits to "lend" their nonprofit mail rate to commercial firms. The Postal Service wants this rule to prohibit nonprofit mailings where the nonprofit does not bear 100 percent of the financial risk of the mailing. The Postal Service’s theory is that the mailings of the nonprofit organizations would not constitute their "own mail" if they did not bear the entire risk of financial loss on the mailings or if anyone, including their professional fundraising counsel, could be considered to have made too much money for their work in producing the mailings. This interpretation applies even where a fundraiser is required by state solicitation laws to guarantee that a certain percentage of fundraising proceeds go to the nonprofit clients.

If this perversion of the current rule is not stopped, MANY nonprofits, fund raising agencies and vendors are at risk for huge assessments. Further, their opportunities for future fund raising programs will be seriously limited.

THERE IS A POTENTIAL SOLUTION

H. R. 1169 has been introduced in the U. S. House of Representatives by Government Reform Committee Chairman Dan Burton. If this bill is enacted into law, it will cure the problem. It will make clear the long standing intent of the Cooperative Mailing Rule, and will stop this aggressive and improper action by the Postal Service. It will spare nonprofits, their agencies and vendors the threat of huge postage assessments. It will also enhance future "no risk" contract opportunities.

HOW DO WE GET THIS BILL PASSED?

Right now, H. R. 1169 has just a few co-sponsors. We need many more co-sponsors in order to show there is broad support for the bill. Ultimately, we will need a majority of the House to vote for the bill to get it passed and sent to the Senate. Therefore, what you need to do is:

1. Recruit your executives and employees to write to their Congressman, asking him/her to co-sponsor and vote for H. R. 1169. Time is of the essence. Call, write or e-mail NOW. Individual letters are more effective than multi-signature petitions. Company letterhead is effective for corporate officials. Personal letterhead or plain paper is fine for non-executive employees. (A sample letter is attached. If you can, choose some of your own wording for your letter. Otherwise, just sign and send this one.)

2. Reach out and get all players in the fundraising process involved. Communications should be from executives and employees of nonprofits, fund raising agencies and vendors. Jobs are at stake and individuals need to be heard from all sectors.

Remember, elected officials like to please their constituents. They typically receive no more than four or five letters on a given legislative subject. If you generate 50-100 letters, calls or e-mails on H. R. 1169 to your congressman, I can assure you that your Congressman will take the matter seriously. The only likely opposition to this legislation will come from the Postal Service which relishes the authority to regulate the internal affairs of nonprofits. Your Congressman would generally rather please 50-100 constituents than please the Postal Service which wants to use postal rates to micro-manage nonprofits.

Congress has just returned from their summer legislative recess. They will be in session until late October. Now is the time to put the pressure on them to pass H. R. 1169. Act NOW to save your job and save many nonprofits and their related agencies from the potential burden of heavy postage "deficiency assessments."

Dick Dingman

Senior Counsel