Nonprofit mail eligibility

Nonprofit classification offers a substantial postage discount to qualified mailings. However, nonprofit mail is subject to more restrictions than regular mail. Among other things, it may not contain advertising or mention of a promotion for travel, insurance, or credit cards. The information below can help you determine whether your mailing qualifies for the nonprofit classification. If you need further assistance, please feel free to contact Mailing Services.

The three types of restrictions affecting the eligibility of mail for nonprofit classification are cooperative mailings; travel, insurance, or financial arrangement announcements; and advertisements for products and services.

1. Cooperative mailings

An authorized nonprofit mailer must not use the nonprofit rate to send matter for unauthorized mailers or rent, delegate, or lend its authorization to any other person or organization. This applies to any arrangement where a noneligible party wants to do a joint mailing with an eligible organization, where both of the parties might share in the cost, risk, or benefit of the mailing.

Nonprofit mailers cannot allow another party to send information in the Nonprofit Standard Mail envelope unless the other party is another qualified nonprofit mailer with a nonprofit authorization to mail at the same postal facility. This can be accomplished by filing a USPS Form 3623, if necessary.

2. Announcements for travel, insurance, or financial arrangements

A 1991 law designed to reduce the commercial use of the nonprofit postal rate placed eligibility restrictions on these types of Nonprofit Standard Mail. Here’s a brief overview of each component.

Travel

Travel advertising or promotional material for travel arrangements are ineligible unless the following three conditions are met:
  • The mailing organization must be authorized to mail at preferred rates.
  • The travel arrangement is designed for and primarily promoted to the members, donors, supporters, or beneficiaries of the organization.
  • The travel is substantially related to one or more of the primary purposes of the organization.
Generally, the Postal Service does not consider an announcement as a travel arrangement unless - whether implied or stated - accommodations, transportation, and a destination are included.

Insurance

Insurance advertising or promotional material for insurance policies are ineligible unless the following three conditions are met:
  • The mailing organization must be authorized to mail at preferred rates.
  • The policy is designed for and primarily promoted to the members, donors, supporters, or beneficiaries of the organization.
  • The policy is not generally otherwise commercially available.

Financial arrangements

If the mail piece contains any advertisements for credit cards, charge cards, debit cards, or similar financial instruments or accounts, it is ineligible for nonprofit status. However, some nonprofit mailings that list membership benefits may be eligible. An exception allows mailers to announce the availability of items otherwise prohibited by these rules. Specifically, a mailing may list member benefits with a response card or phone number, provided that advertising, promotional, or application material for the product or service is not included. For example, “Members of the XYZ Association are eligible for life, health, and auto insurance; call for more information.”

Tip: Don’t use adjectives when describing member benefits. The USPS claims adjectives constitute advertising.

3. Advertisements for products and services

Substantially related - The substantially related eligibility criteria are more challenging to grasp. One easy rule of thumb applies, though: If any of the items advertised in your mail piece are subject to unrelated business income tax, the item is not substantially related. However, the opposite isn’t necessarily true. Freedom from paying the tax does not necessarily mean that your mail meets the substantially related test. And, there are exceptions to the substantially related test as well. The following tips may help your mailing qualify:
  • When possible, try to secure an IRS ruling on any products advertised in your mailings. If the IRS certifies that the items advertised are related to the primary mission of your organization, the USPS will accept that determination.
  • If the piece causes you to raise questions about its eligibility, be assured it will eventually bring questions from the USPS. If you have an in-house attorney with tax experience, run your proposed mail piece by him or her. You can also show it to a USPS classification specialist.
  • If advertising a product with educational value to recipients, be certain to emphasize why the product is linked to the primary purpose of the organization. An advertisement for a T-shirt that addresses the workmanship of the shirt and not the importance of the educational message printed on the shirt is bound to be rejected.

Premiums

If a premium offered to contributors is substantially related to the primary purpose of the organization, the mailer may announce its availability in a Nonprofit Standard mail piece. If it is not substantially related - a tote bag or coffee mug, for example - then it must pass two tests:
  • The funds requested must be more than four times the item’s cost to the organization. If the tote bag cost $5.00, it may be offered only in exchange for a donation or dues of $20.01 or more. However, a denoted item can be offered for any level of donation or dues unless a represented value is listed.
  • If the value of an item is listed, it is considered a represented value, and the organization must ask for more than twice the represented value. In other words, “this watch worth $19.99” must be linked to a request for at least $39.99 in support. If the mail piece does not contain a represented value, then only the cost test will be applied. If, however, the mail piece does contain a represented value, then it is subject to meeting both tests - more than twice the represented value and more than four times the cost.

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Iowa City, Iowa 52242-1602
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