June 17, 2004 Sherry Freda Manager, Mailing Standards U.S. Postal Service 1735 N. Lynn St., Room 3025 Arlington, VA 22209-6038 RE: Proposed Rule on Eligibility Requirements for Standard Mail, Federal Register, April 19, 2004 Dear Ms. Freda: On behalf of our more than 23,000 members in the United States, I am pleased to submit the comments of the Association of Fundraising Professionals (AFP) regarding the United States Postal Service s (USPS) proposed rule, Eligibility Requirements for Standard Mail. AFP represents those individuals responsible for generating philanthropic support for a wide variety of charities. Our members are extremely troubled about the impact the proposed rule would have on fundraising and fundraising costs. We are especially concerned because the rule seems to ignore some of the basic elements of fundraising. AFP will set forth comments on several issues related to the proposed rule: 1) direct mail and the fundraising process, 2) the impact of the proposed rule and 3) an alternative for the USPS to consider. Background For more than 40 years, the Association of Fundraising Professionals has provided guidance and standards to those engaged in the philanthropic process. AFP s considerable expertise in the legislative field is based upon the combined experience of its 26,000 members across North America and around the world. We have 172 chapters located in almost every state and metropolitan area, as well as in Canada, Mexico and China.
AFP members are required annually to sign our Code of Ethical Principles and Standards of Professional Practice, which was first developed in 1964. AFP instituted a credentialing process in 1981 the CFRE (Certified Fund Raising Executive) designation to aid in identifying for the giving public those fundraisers who possess the demonstrated knowledge and skills necessary to perform their duties in an effective, conscientious, ethical, and professional manner. We also have a strong ethics enforcement policy that can result in the revocation of credentials and expulsion of members who engage in prohibited behavior. This background is cited to emphasize the importance that AFP and its members place on ethical fundraising. Since its founding, AFP has championed donor rights. AFP was the driving force behind the creation of the Donor Bill of Rights and provides information to potential donors about how to select and evaluate charities, and give wisely to them. The Fundraising Process The purpose of fundraising is not to simply generate money, but to build relationships with donors. As donors become more comfortable with a charity and understand its mission and programs, they are more likely to give. They also will tend to give more (and tend to remain more loyal to the charity) the stronger that relationship is. Communication is critical in the fundraising process. A charity will communicate with donors and potential donors all the time so that they feel a connection with the charity a sense that they are working together with the nonprofit to accomplish its mission. But these communications aren t just solicitations. A charity that just sends one solicitation after another without trying to build these connections and relationships is wasting money. Very few donors respond to that kind of solicitation strategy, and even fewer ever increase their gifts from year to year based on those types of appeals. Most charities send a variety of communications to members newsletters, policy updates, notices of events, reminders, etc. to build relationships with donors. Almost all of these communications will include some type of solicitation, whether it s a reminder about a campaign or a list of recent donors. However, the primary purpose of the communication is not necessarily to solicit a contribution. They have a dual purpose, both education (or programming) and solicitation. AFP Comments on USPS Exclusive Purpose Rule Page 2
To further build connections and relationships with donors, charities use personal information about their donors in these communications. This is a critical part of the relationship-building process and donors have come to expect it. If donors have been giving to an organization for several years, they don t want to be treated as Donor Number 123 or addressed as Sir or Madam. If they have given in the past or have identified programs of interest, they want that data and those preferences reflected in the types of information they receive from the charity. Donor response improves immensely with this type of personal information because it helps to create a connection with the charity. Impact of the Rule Unfortunately, the rule proposed by the USPS flies in the face of this basic practice conducted by hundreds of thousands of charities across the country every day. Under the proposed rule, a mailing that contains personal information will be eligible for Standard Mail rates only if all of the following three tests are satisfied: The mailing contains explicit advertising for a product or service for sale or lease or a solicitation for a donation. All of the personal information concerning the addressee is directly related to the advertising or solicitation. Advertising or soliciting is the exclusive purpose of the mail piece. As noted previously, most charity mailings are not created exclusively for solicitation purposes and do contain personal information other than just name and address. Consequently, the rule would force charities to either (a) essentially eliminate these types of communications, or (b) force charities to dramatically increase their mailing budgets. If a charity chooses the first option, then its ability to educate donors and the public about its mission and programs decreases substantially. This will erode the charity s relationships and connections with its donors, leading to a reduction in contributions and forcing the charity to spend even more on solicitations. Ironically, the American Institute of Certified Public Accountants Statement of Position 98-2 (AICPA SOP 98-2) allows for charities to create mailings that have dual purposes: both education and solicitation. The USPS proposed rule compromises a charity s ability to make use of AICPA SOP 98-2. AFP Comments on USPS Exclusive Purpose Rule Page 3
If a charity chooses the second option, then the additional money it will spend on mailing will affect it in other ways. Administrative costs will increase, while money spent on programming will decrease. This change, in and of itself, is not a positive one for charities and the people they serve. In addition, it also may affect a charity s standing with watchdog organizations that usually grade an organization based on how much it spends on programs versus fundraising and administrative expenses. In the end, neither option is beneficial for the charity, its donors and the people who use the charity s services. Amendments to the Proposed Rule While the proposed rule may be appropriate for for-profit marketing, it will have a detrimental impact on the charitable sector. While a for-profit s primary purpose is to make money, education and programming (aligned with its stated nonprofit mission) are the primary purposes of a charity. Fundraising is simply a means to an end in the charitable context. With this distinction in mind, AFP would recommend that the USPS amend its proposal to allow nonprofit organizations to send mailings at the Standard Mail rates with personal information (beyond name and address) so long as: The purpose of the mailing is for solicitation and/or a purpose related to the charity s mission (as defined by its Articles of Incorporation and application for tax-exempt status documents held by the Internal Revenue Service), and The personal information used in the mailing is directly related to the purpose of the mailing. AFP understands that the Alliance of Nonprofit Mailers has submitted a proposal with specific language relating to this type of change, and AFP would strongly support the Alliance s amendment. AFP Comments on USPS Exclusive Purpose Rule Page 4
Conclusion Charities are being asked to be more accountable not only for their programs and effectiveness, but also for their fiscal management. The USPS s proposed rule will be detrimental to charities in both areas. AFP strongly encourages the USPS to reconsider the rule and amend it so that charities can continue to build strong relationships with donors for the benefit of the people they serve and all of society. Thank you for your consideration. Should you have any questions regarding these comments, please do not hesitate to contact me at 703-519-8444 or pmaehara@afpnet.org, or Walter Sczudlo, AFP s general counsel, at 703-519-8455 or wsczudlo@afpnet.org. Sincerely, Paulette V. Maehara, CFRE, CAE President and CEO Association of Fundraising Professionals 1101 King Street, Suite 700 Alexandria, VA 22314 (800) 666-3863 www.afpnet.org AFP Comments on USPS Exclusive Purpose Rule Page 5