Critics: Loosened Mail Rule Could Open Pandora's Box of Abuse

A change to the United States Postal Service’s Cooperative Mail Rule went into effect late last year, permitting nonprofit mailers to partner with third-party, commercial fundraising firms while still retaining the ability to mail at nonprofit postal rates. Previously, if a nonprofit group entered a joint venture with a for-profit company, any resulting mail would be ineligible for the nonprofit rate.

While the new rule received support and praise from some organizations, including the Direct Marketing Association’s Nonprofit Federation, for ultimately “allowing nonprofits to grow the potential pool of charitable donors while the general economy is still faltering,” groups such as the Alliance of Nonprofit Mailers, and even congressional leaders, have voiced cutting criticisms. The Alliance’s major contention is that smaller nonprofit organizations could potentially fall victim to unscrupulous, commercial fundraising firms.

“We are wholesale opposed to the change in the rule,” says Neal Denton, executive director of the Alliance. “We’ve had cases years ago of fraud and abuse that have since been prevented by the Postal Service’s current [nonprofit] mail rule. Now, the Postal Service is opening the door to these intrusions by allowing commercial mailers to use the preferred postal rate.”

The USPS has said it plans to work extensively with representatives of the nonprofit and fundraising industry to educate organizations against potential abuse.

“We made the rule change at the urging of Congress, and we have assured those members who have raised concerns that we will be vigilant for potential abuse and, if necessary, revisit this issue again,” says Jim Quirk, a USPS public relations representative. “We are working with the nonprofit industry to educate all organizations operating under this rule. In addition, the Consumer Advocate will monitor the implementation of the new rule to determine whether abuses are occurring.”

In response, Denton said flatly, “I’m going to say this crisply and very carefully: The Postal Service’s [safeguard] approach is almost laughable. We have been relying on the USPS to make these kind of schemes unlawful. Now they are opening the doors and allowing this fraud and abuse with their blessing.”