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National Law
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Please Explain Postal Service Rules
on Newsletter Advertising
Local units often ask the Law Committee about these rules. While this is not strictly a legal matter, the question comes up so often that we offer some general information here.
The first question to ask is:
Do you use a nonprofit mailing permit?
No:
The Postal Service will collect your postage and say "Thank you!" They will not examine the content. As an example, you will find many ads in THE ENSIGN® that would not be accepted in a non-profit mailing. THE ENSIGN is mailed under the Periodicals (commercial magazine/newspaper) rate, so the non-profit mailing regulations do not apply.
Yes (or, We'd like to):
Get a copy of Postal Service Publication 417 at any Bulk Mail Center (BMC). BMCs are often listed in the "Government Offices" section of your phone book. You can also find a list of BMCs on-line (pdf format, Acrobat Reader required). It pays to know the rules! Some of the most common issues are discussed below.
What do we do about the income from advertisements?
The Postal Service doesn't care, but you may need to report this income as "unrelated business income". See the Law Committee FAQ for more details.
More FAQ's:
Q. Is my squadron's newsletter eligible for the Nonprofit Mail rates?
A. Your squadron must have, or be granted, a nonprofit permit. If you have an approved permit, your publication will be eligible for mailing at the Nonprofit Standard Mail rates if it does not contain ineligible advertisements, and it meets at least one of these tests:
- The publication is a "low-cost item": currently this means, "the organization pays less than $6.75 per copy".
- The publication is a "donated item": a member donates the newsletters as finished items and the squadron distributes them. In this case, the price wouldn't matter.
- The publication is eligible for a Periodicals mailing permit but has not been authorized to mail at those rates.
Most USPS® squadron publications will meet the first test, and should be formatted so they meet the third test as well.
There is one more important consideration. A nonprofit permit mailing must contain at least 150 pieces. If you squadron is large, you will save a lot of money. If your squadron is small, you may may not have enough mail to qualify.
Q. What are "ineligible advertisements"?
A. Advertisements for credit cards are always prohibited, and advertisements for insurance and travelarrangements are severely restricted.
You may tell members about the USPS Member Benefits program under a special exemption in the Postal Service's rules. A simple announcement of the existence of the benefit and contact information is not an advertisement.
Permitted announcement: Squadron members are eligible for an affinity credit card program and a boat insurance program. Call Headquarters at (888) FOR-USPS to receive more information.
If you indicate price or suggest how to use the benefit, then you move into the realm of "advertising".
Prohibited advertisement: Dues statements will be mailed soon. Why not use your USPS/FUSA affinity card for dues payment?
Restricted advertisement: St. Paul offers discounts on boat insurance to USPS members.
Q. May we acknowledge contributors, donors, and sponsors in our newsletter?
A. You may acknowledge sponsorship even when it comes from insurance agents, travel agents, and financial institutions. The rules permit organizations to acknowledge contributors, donors, and sponsors if no advertising is associated with the acknowledgment. The acknowledgment may include the name of the sponsor, donor, or contributor and any company logo. If the acknowledgment includes advertising (for example, a description of the sponsor's products), the acknowledgment becomes an advertisement subject to the applicable advertising restrictions and prohibitions.
Q. May we provide a mailing service for a neighboring squadron?
A. Each permit covers one organization. Cooperative mailings are not permitted. The Postal Service can revoke your permit if you allow another organization to use it for mailing, even if that organization could qualify for a permit.
Q. May we announce activities of the district or neighboring squadrons?
A. As long as you are not paid for the announcement, this is an exempt "public service announcement". If you are paid for the announcement, then it is advertising.
Q. If low-cost products are advertised in a newsletter that does not meet the content requirements for a periodical publication, must the products be substantially related to the squadron's purposes?
A. If a mailing does not meet one of the three tests, then all advertising must be for items substantially related to the squadron's purposes as stated in the permit application.
This is why the Law Committee suggests using a periodical format. It is easy to do, and eliminates a major hurdle for everything except "ineligible advertisements."
Q. A member has donated an item to the squadron. We want to sell it as a fundraiser. May we mail an advertisement at the Nonprofit Standard Mail rates?
A. The Postal Service says that donated products and services are substantially related the organization's purposes. This means that you could send a special mailing about the donation without qualifying the mailing as a periodical.
Q. What makes a newsletter a "Periodical"?
A. By law, a periodical publication of an authorized organization is eligible for mailing at the Nonprofit Standard Mail rates, provided that the publication does not contain an advertisement that is ineligible for mailing at these rates. To qualify as a periodical publication, the publication must meet these criteria:
- Be sold or have a listed price (list a nominal price in the identification statement and send copies of the newsletter to your advertisers in return for part of the advertising fee).
- Have a title.
- Be published at regular intervals of at least four times a year.
- Be formed of printed sheets (mimeograph is not "printed", but photocopying qualifies).
- Have an identification statement on one of the first five pages
- Have a known office of publication (this is covered if you include the identification statement).
- Meet the eligibility requirements prescribed for one of the Periodicals categories (for example, a general publication, a requester publication, or a publication of an institution or society).
Sample identification statement:
Publication's title and number: Podunk Ponderings
Issue date: JULY 1999 (may be omitted here if on the front cover)
Statement of frequency: PUBLISHED MONTHLY
Authorized organization's name and address:
Podunk Power Squadron, 123 Main St., Podunk, PA 11111
Issue number: ISSUE NO. 30 (may be omitted if on the front cover or cover page)
Subscription price: (If applicable)
A periodical may also qualify for mailing at the Nonprofit Standard Mail rates as a product if it is a low-cost item or a donated item. Because most periodicals are likely to be low-cost items, the Postal Service will consider that statutory provision first before examining the publication for the periodical publication criteria.
The following examples have been adapted from Postal Service Publication 417.
References to Membership Benefits:
References to and a response card or other instructions for making inquiries about services or benefits available to members of the authorized organization is permitted, provided that advertising, promotional, or application material for such services or benefits is not included. (This standard is sometimes referred to as the "permissible reference" rule.)
A simple reference to a membership benefit of an organization is not considered advertising (for example, "Members receive an affinity card. Write for details"). The rules allow an authorized organization to reference membership benefits if the benefits are not advertised.
Examples - Permissible referencesAuthorized organization X includes in its membership packet this statement: "An insurance plan is one of the many benefits offered to members. Write for insurance information." This simple reference to the availability of insurance as a benefit of membership in the organization is not considered advertising but merely a permissible reference to membership benefits.
An authorized organization distributes a circular with the announcement: "Members are entitled to life insurance coverage, dental insurance coverage, and free tax preparation assistance. Call 111-1111 or write for more information." The announcement is not considered an advertisement for life insurance or dental insurance, but merely permissible references to membership benefits, and is not an advertisement for a tax service because nothing is sold, that is, the service is free.
Example - Impermissible references
An authorized organization distributes a circular with the announcement: "Members are entitled to low-cost life insurance coverage, competitive dental insurance coverage, and free tax preparation assistance. Call 111-1111 or write for more information." The circular contains impermissible advertising for the life insurance and the dental insurance. The circular is not limited to permissible references. The term "low-cost" and "competitive" are considered promotional. The reference to tax preparation service is not an advertisement for a tax service because nothing is sold.
Acknowledgments of Donors and Sponsors:
A listing of sponsors, donors, or contributors is permissible and is a type of acknowledgment. Such a listing is not considered advertising if:
- The listing of each individual or organization appears on a page under a heading such as "sponsors," "contributors," "donors."
- The listing does not contain promotional material.
- The listing is not labeled as advertising in other parts of the mailpiece. As a rule, a listing containing only the names of sponsors is not considered promotional, but the inclusion of additional information might be considered promotional, depending on its content. For example, if the listing includes such a line as "Acme Ice Cream Parlor, Our City's Favorite Ice Cream Parlor," the listing is considered an advertisement because the phrase "Our City's Favorite Ice Cream Parlor" is promotional. The phrase "Acme Ice Cream Parlor" is permissible if that parlor is the sponsor.
LawCom note: Remember that advertising is much less of a problem if your newsletter qualifies as a periodical. The most common situation where this rule would apply is if you mail rosters or announcements of major events using your permit. For example, you may mail a special program for a public service event, but you would need to restrict the acknowledgments for the sponsors.
Public service announcements (PSAs) are commonly found in Nonprofit Standard Mail material, especially periodical publications. These announcements are not treated as advertising. PSAs are announcements for which no valuable consideration is received by the publisher; which do not include any matter related to the business interests of the publisher; and which promote programs, activities, or services of federal, state, or local governments or of nonprofit organizations, or matter generally regarded as in the public interest.
Material that advertises, promotes, offers, or, for a fee or consideration, recommends, describes, or announces the availability of any insurance policy is ineligible for mailing at the Nonprofit Standard Mail rates unless these three conditions are met:
- The organization promoting the policy is authorized to mail at the Nonprofit Standard Mail rates at the office of mailing.
- The policy is designed for and primarily promoted to the members, donors, supporters, or beneficiaries of that organization.
- The coverage provided by the policy is not generally otherwise commercially available.
LawCom Note: Since boat insurance is generally available on the commercial market, the USPS Boat Insurance Program may be announced as a member benefit, but not advertised.
Material that advertises, promotes, offers, or, for a fee or consideration, recommends, describes, or announces the availability of any travel arrangement is ineligible for mailing at the Nonprofit Standard Mail rates unless these three conditions are met:
- The organization promoting the arrangement is authorized to mail at the Nonprofit Standard Mail rates at the office of mailing.
- The arrangement is designed for and primarily promoted to the members, donors, supporters, or beneficiaries of that organization.
- The travel contributes substantially - aside from the cultivation of members, donors, or supporters or the acquisition of income or funds - to one or more of the purposes that constitute the basis for the organization's authorization to mail at the Nonprofit Standard Mail rates.
A squadron publication could not carry the same ad. The arrangement was designed for district members both within and outside the squadron and therefore the offer would fail the second test.
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