Special Report: Just Try Mailing A Letter-Go Ahead

December 1, 2004       Jeff Jones      

The traditional backbones of nonprofit fundraising have been direct mail and telemarketing. Both areas made headlines this year as several postal issues were debated, and the federal Do Not Call Registry’s (DNCR) legitimacy was upheld.

The United States Postal Service (USPS) will soon file for a general rate increase effective in early 2006, Neal Denton, executive director of the Alliance for Nonprofit Mailers, wrote in a September opinion piece. Without federal legislative postal reforms, the next increase will come sooner and be larger than necessary, Denton wrote. Rates could jump as much as 15 percent without congressional action, he wrote.

“Impending rate problems have got to be one of the top stories of the year,” Denton said in late October. He called Congress’s inability to pass postal reform legislation a “failure.” Some people are holding out for possible action during a post-election lame duck session, but Denton expressed his doubts.

“Congress is not coming back in a lame duck session to address postal reform,” he said.

Inaction by federal legislators regarding postal reform also put off a chance to revisit and discuss the right approach to cooperative mail rules.

One element of a House postal reform bill contained changes to the cooperative mail rule. A Senate version of a similar bill did not include those changes.

In 2003, the USPS changed the cooperative mail rule to allow for-profit vendors to send mailings they were previously banned from posting at a discount rate. Some expressed concerns that the changes would allow for-profit fundraisers to take advantage of nonprofits, and also lead to an increase in Nonprofit Standard mail.

Lee M. Cassidy, executive director emeritus of the DMA Nonprofit Federation and NPT senior adviser, wrote in an opinion piece that he wasn’t concerned with a repeat of past abuses “for the same reason that few crimes are committed inside police stations.” Cassidy explained that the USPS “is certain to quickly investigate any complaints about violation of the new rule and take sure action when necessary.”

The issue isn’t dead.

Cooperative mail rules may be heard from again as Sen. Charles Grassley, R-Iowa, continues his review of nonprofits, specifically “bloated” fundraising contracts, according to Denton.

Elsewhere, the USPS finalized a rule allowing nonprofit groups that meet specific requirements to send members insurance offers at the Nonprofit Standard postal rate. The final rule took effect Sept. 8.

After a lengthy court battle, the federal Do Not Call Registry (DNCR) is here to stay. The U.S. Supreme Court refused to hear a trade association’s appeal of a lower court ruling that had upheld the DNCR. The DNCR permits consumers to place their telephone numbers on a national list that prohibits calls from most telemarketers. Political candidates and nonprofits are exempt.

“Sellers and service providers understand the regulations and have demonstrated their commitment to compliance,” Tim Searcy, CEO of the Indianapolis, Ind.-based American Teleservices Association (ATA), said in a prepared statement. “At the same time, however, they are entitled to operate in a regulatory environment that is reasonably consistent and predictable, and we therefore seek a uniform, nationwide framework for the regulation of interstate teleservices calls.”

ATA had challenged the DNCR on free speech grounds.

Do not call lists, which some thought would destroy telephone fundraising, turned out to benefit some nonprofits. Mesa, Ariz.-based MDS Communications found in a study that response rates for people who had signed up for their state do not call list were better than for those for people who had not signed up.

“This report shows very clearly that state do not call lists have not impacted nonprofits,” said Jay Mount, president of MDS and study author.

One other court decision shaped nonprofits telemarketing future. A federal District Court judge in Baltimore ruled against two charities challenging the constitutionality of the federal telemarketing sales rule (TSR). Under the ruling, professional fundraising firms calling on behalf of charities must meet the TSR’s requirements, including limiting abandoned call rates.

U.S. District Court judge J. Frederick Motz found the TSR applied even-handedly to all telemarketing defined without reference to subject matter or viewpoint or solicitations.

The litigation isn’t over, though.

Errol Copilevitz, an attorney representing the charities in that case, said the decision was appealed, and oral arguments are set to begin Dec. 1 in the 4th Circuit Court of Appeals in Richmond, Va.