Tuesday, November 24, 2009

How and Why to apply to Mail at NonProfit Standard Mail Prices

As a project for my work at T.H.E. BRAIN TRUST, I've been asked to figure out how to apply to mail at nonprofit standard mail prices. This post will be a how-to and a why-to, with a cost/benefit analysis and the procedure we're using to apply.

The first thing we did is go to the postal service and find form 3624, the application to mail at nonprofit standard mail prices. This form requires several forms of proof that you are, in fact, a nonprofit and not a lying for-profit.

These forms of proof include 1 of the following;
-an IRS letter of exemption from payment of federal income tax,
-a financial statement prepared by an independent auditor proving your nonprofit status (which must include balance sheets, notes, etc.),
-a place of worship.

Don't ask me whether they want you to mail your place of worship to them, I didn't need to use that part of the form. I hope not, the postage would convince you there is no god.

You also need a copy of one of the following;
-your articles of incorporation (you do not need a certified copy),
-your articles of association,
-your charter,
-your constitution,
-your enabling legislation,
-your trust indenture,
-something else which you can try and explain but knowing the gov't will probably get rejected.

Finally, you need some proof that you are operating. a few copies of several of the following work;
-financial statements,
-listing of activities for the past 6-12 months,
-membership applications,
-minutes of meetings,
-organizational or other documents substantiating that the applicant is the state or national committee of the political party,
-a copy of the statute, ordinance or other authority establishing responsibility for voter registration.

We're sending in some brochures and form 990s for the last couple of years.

So, we filled out our form 3624, found that crap (articles of inc, IRS letter, the brochures and 990s), and thought we were done! But a quick call to the post office (always a good idea when dealing with the gov't) informed us that we were, in fact, only beginning! And we still didn't even know if it would be worth it for a small non-profit like us to apply for this thing.

The issue now was that you have to mark the mail in your nonprofit bulk mailing (bulk and standard mailings are the same in post-office terminology) stuff somehow. All of the options for doing so require another layer of paperwork. But they have no permit application fees required. Well, except another three hours or so making sure you did the form just right, ha, ha, ha. That obviously doesn't count. And i guess there's one of the options that doubles your costs in the venture. But moving on!

So, with your form 3624 and associated materials in hand, you go to your general mailing office. These are apparently not marked any differently from regular post offices, you'll have to call your local mail requirements office (Also not marked differently. Call your post office and ask for it. You didn't really think that this guide would save you all of your phone calls to the gov't, did you?) to find out which one is right for you. In our case it was the Boston General Mailing office and we go to room 1004.

Again, all you need to bring with you on this trip is form 3624, 2 forms of ID (one photo), and the money for your permit to mail at bulk rates (185 or so). If you want to leave with a rubberstamp for your mail bring another 185. I'll get to why.

The person taking your form 3624 will tell you you're applying for one of These Things in the office;
A postage meter/a license to use one. Companies own the postage meters and will rent them to you if you have a license.
Precanceled stamps! Which require the form
Permit imprint- rubber stampy thing you use to stamp your special, special mail.

Regardless of which, annual fee of $185. The stamp (permit imprint) has a special fee of another $185. Because rubber stamps are so expensive. We'll get into whether this is worth it in a sec.

So, we bring our app down to general mailing room 1004, (along with 2 forms of ID, one photo), fill out the app for permit, submit 3624 along with documentation, after deciding which one of the above to use. You walk out with your stampy thing or the ability to use precanceled stamps or your license to use the postage meter. The application to mail as a nonprofit takes a couple weeks to go through.

If you decide to mail while pending, you mail at normal rates. If you are approved, your approval is retroactive to the day you handed it in and you can apply for a refund by Writing a letter to the mailing office including a copy of the mailing statement.

So! Now we know how. Time to figure out whether or not to do it!

We're sending out about 3k letters, once or twice per year. There are size requirements on bulk/standard mailings (i don't know why they call it standard when you are mailing in bulk, but the post office people will keep saying standard and that's what it means), but our couple of pieces of paper and a brochure are well within normal letter requirements.

The basic thing to consider here is that if you're sending out a bulk mailing anyway, you pay the 185 regardless of whether it's for profit or not for profit. So that's not worth considering for us, due to the whole retroactive nonprofit status thing, and the fact that the mailing at nonprofit status thing doesn't cost us anything.

However, we can mail all this junk first class instead of as a bulk mailing. Which is obviously more expensive, but the way we'll figure out how much we'll save with our nonprofit application.

First class costs 44c/letter. For a nonprofit bulk mailing, it's 17.2c/letter. So a 27c difference per letter. The mail guy said the bulk mailing could be a little cheaper depending on sorting, where it's going, barcoding, and a bunch of other maily things our nonprofit probably doesn't have time to do (if yours does you probably have time to have someone look into them on your own), but the most you pay is 17.2c.

So if we do 2 mailings of 3k per year, 6k *44c is 2644 dollars at first class rates. For standard non-profit, it's 6k* 17.2 is 1072 dollars, plus the annual fee for the ability to send out bulk mailings is 1217. The charge to be able to send out bulk mailings is an anniversary fee, not a calendar year one, meaning it goes for 1 year from the date bought.

So our savings are about 1400 dollars for two mailings, and i bet we could cram the two mailings into one anniversary schedule if we wanted to, even though we generally send out only 1 mailing of 3k per year. Would the hassle of trying to do that every two years be worth the saved 185? Would it be worth the saved 370 for both the bulk mailing permit and a permit stamp? Probably not, depends on the wages of whoever's doing it.

If we were only sending out 3k per year our savings are (3000*.44)- (3000*.172 +185), or 1320-701, or 619. Still almost pays for the two weeks it took me to figure this out. Our savings per letter might also add up over the course of the year. Every time we send out 685 letters we save back the cost of the bulk mailing permit, and another 685 would cover the stamp. So we're in the money for the whole thing, but for someone with less than 685 letters per year it might not be worth it.

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