Nonprofit Direct Mail: IRS vs. USPS Nonprofits
Churches, charities, credit unions, and country clubs are all ‘nonprofits’. They each might fill out different forms—but every single one of them can affirm that they are, in fact, a nonprofit organization.
At least… in the eyes of the Internal Revenue Service. In the eyes of the United States Postal Service, only two of those entities are eligible to send something called Nonprofit Marketing Mail.
And as part of our webinar titled Nonprofit Mailing Requirements & Postage Savings Opportunities, we’re taking a step back to help you understand whether it’s even worth spending an hour of your time on a fine September day.
Because today, we’re setting out to help you figure out whether or not the USPS even considers you a “nonprofit” in their eyes.
Background: Nonprofit Marketing Mail
The USPS offers certain nonprofit organizations the opportunity to send a specific subclass of mail (Nonprofit Marketing Mail) for approximately 40% less than Marketing Mail. Applying both to Letters and Flats, the cost savings are tangible—if you’re able to follow the rules.
But knowing just how much you could save (before additional discounts, incentives, and promotions), it’s important to know the nuances, requirements, and pitfalls. First of which being: Are you a USPS nonprofit… or just a tax-exempt organization?
Which Nonprofit Organization Types Get a Postage Discount?
If you want those sweet, sweet USPS discounts, you gotta play by their rules. And when the team is reviewing your application to mail as a nonprofit, they need to make sure that your purpose fits their criteria and you are truly a nonprofit. They also need to make sure you’re the right kind of nonprofit.
During the application, the USPS requires three pieces of information:
PS Form 3624 - Application to Mail at Nonprofit USPS Marketing Mail Prices, available on USPS.com (http://about.usps.com/forms/ps3624.pdf)
Evidence that you are a nonprofit organization, either a letter of exemption from the IRS or an audited financial statement.
Documents describing the primary purpose of your organization such as founding documents or other organizing instruments.
The last of these is where things get tricky, as this is where the USPS weeds out nonprofits they may find ineligible. So who counts and who doesn’t? That’s where we turn to the guiding document—Publication 417, Nonprofit USPS Marketing Mail Eligibility. And according to this, the following entities count as nonprofits eligible for reduced rates:
Religious
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Reasonably straightforward to start. If you’re a place of worship, a nonprofit that supports others who conduct religious worship, or one whose goal is to further religious teaching, you’re likely good to go. According to the official document, USPS gives discounts to organizations who:
Conduct religious worship (e.g., churches, synagogues, temples, mosques).
Support the religious activities of nonprofit organizations whose primary purpose is to conduct religious worship.
Further the teaching of particular religious faiths or tenets, including religious instruction and the dissemination of religious information.
We’ve helped many a religious organization not just to remain compliant, but to find even more postage savings opportunities through our logistics partners. And in the coming months, we’re hopefully writing up a case study documenting their journey to postal excellence. Stay tuned.
Educational
Another category wholly engulfed under the 501(c)(3) umbrella, educational entities under the USPS include schools, museums, orchestras, and more. Generally, as long as an entity’s primary purpose is the instruction or training of individuals, or the instruction of the public, it should pass.
And this includes the following
Organizations that have a regularly scheduled curriculum, a regular faculty, and a regularly enrolled body of students in attendance at a place where educational activities are regularly conducted
Primary and Secondary Schools
Two-Year and Four-Year Colleges & Universities
Professional and Trade Schools
Organizations whose activities consist of presenting public discussion groups, forums, panels, lectures, or similar programs, including broadcasts of such activities on radio or television
Organizations that present a course of instruction by correspondence, television, or radio
Museums
Planetariums
Symphony orchestras
Zoos
At Sepire, education is one of our specialties—and we’ve helped hundreds of universities make meaningful connections with millions of prospective students. From simple postcards to complete welcome packages, we do it all and are ready to help you. Check out our expertise in education here.
Scientific
A reasonably straightforward nonprofit type, scientific entities also fall into the 501(c)(3) category and are defined as organizations whose primary purpose is to conduct research in the applied, pure, or natural sciences or to disseminate technical information dealing with the applied, pure, or natural sciences.
Charitable/Philanthropic
One of the more challenging categories, charitable and philanthropic organizations generally are considered those organizations that operate as a nonprofit and whose goal is to help the public.
These may include the following:
Organizations focused on providing relief to poor, distressed, or underprivileged.
Entities focused on advancing religious, educational, or scientific goals.
Organizations dedicated to maintenance or construction of public buildings, monuments, or works.
Entities built to help lessen the burdens of government.
Nonprofits focused on the promotion of social welfare for any of the above purposes or to lessen neighborhood tensions, eliminate prejudice and discrimination, defend human and civil rights secured by law, or combat community deterioration and juvenile delinquency.
That said, the USPS does include two ‘tightropes’ you may need to walk involving contributions and causes:
If an organization that is organized and operated to relieve indigent persons receives voluntary contributions from those persons, it does not necessarily make it ineligible for nonprofit rates as a philanthropic organization.
If an organization, in carrying out its primary purpose, advocates social or civic changes or presents ideas on controversial issues to influence public opinion and sentiment to accept its views, it does not necessarily make it ineligible for nonprofit rates as a philanthropic organization.
Agricultural
If you’re a nonprofit focused on helping growers grow, you may be eligible for discounted postage. From agricultural education to local ag fairs, discounts are available to entities whose primary purpose is to better the conditions of those engaged in agricultural pursuits, to improve the grade of their products, and to develop a higher degree of efficiency in agriculture; or to collect and disseminate information or materials about agriculture.
Labor
Another reasonably straightforward nonprofit type, labor unions and employee associations are entitled to discounted rates on Marketing Mail. Per Publication 417,
“Labor organizations include, but are not limited to, organizations (e.g., labor unions and employee associations) in which employees or workers participate, whose primary purpose is to deal with employers on such issues as grievances, labor disputes, wages, hours of employment, and working conditions.”
Veterans
Do you support veterans? Are you a nonprofit? You’re eligible for Nonprofit rates. A veterans’ organization is a nonprofit organization of veterans of the armed services of the United States, or an auxiliary unit or society of, or a trust or foundation for, any such post or organization.
Fraternal
Out of the eight nonprofit ‘buckets’, we have possibly the most complicated of the bunch. Because this is where the USPS deviates a bit from the IRS.
As written, a fraternal organization is a nonprofit organization whose primary purpose is to foster fellowship and mutual benefits among its members. And the organization must…
Be organized under a lodge or chapter system.
Have a representative form of government.
Follow a ritualistic format.
Be composed of members elected to membership by vote of the members.
Here are just some of the examples given by the USPS:
Masons
Knights of Columbus
Elks
College fraternities or sororities
Fraternal organizations do not encompass such organizations as business leagues, professional associations, civic associations, or social clubs.
National fraternity accountants and tax professionals might be confused. After all, the IRS recognizes them as a 501(c)(7) Social Club.
And Which Don’t?
We don’t make the rules. We just do what we can to help you understand them. And unfortunately, there are a handful of organizations who might fit into the traditional definition of a nonprofit—but not in the eyes of the USPS.
Though this list is by no means exhaustive, here are just some of the organizations deemed tax exempt but aren’t eligible for discounted postage:
Chambers of Commerce
Business Leagues
A Majority of IRS-Defined Social Clubs
Homeowner’s Associations
Country Clubs
Nonprofit Cemetery Companies
State Chartered Credit Unions
Cooperative Hospital Service Organizations
Get More from Your Nonprofit Mail
If you clicked on this article, there’s a good chance that you work at a nonprofit organization. You know what you do, why you do it, and who you serve. Your accountant understands what forms to fill out each year to retain this nonprofit status. But if you’re looking to make real connections with members, donors, or stakeholders, we’d love to help you.
At Sepire, we strive to help nonprofit organizations save money on postage and create prompt, personalized, actionable mail that drives results. Get to know more about our automated direct mail solution, our expertise in the nonprofit space, and drop us a line to learn more.