Occasionally our school magazine clients want to include content advertising school products or services, such as centennial books, school tee-shirts, workshops, etc. But will ads nullify the nonprofit mailing status of the publication?
The Short Answer
If the proceeds from the sale go to the school, advertising the products or services is acceptable and will not jeopardize the nonprofit postage status. This includes fundraising efforts to support the school.
Commercial advertisements, such as for retail products or services not directly related to the school, may result in a postage rate upcharge from nonprofit to standard rate for the entire mailing—or, for repeated instances, loss of the school’s nonprofit status. (As a hypothetical example, an 8 oz. magazine would mail at an average of 77¢ each at nonprofit rate, but an average of 99¢ each at standard rate.)
Consult the Expert
Have a question? You can learn a lot of useful information from your USPS Mail Requirements Specialist. (We called Jim Conroy, USPS Mail Requirements Specialist, in Hartford, CT, 860-524-6080, for some support on this post.)
The Fine Print
Of course, if you want the long answer, check the USPS Domestic Mail Manual, nonprofit section (pertinent sections excerpted below).
703: Nonprofit Standard Mail and Other Unique Eligibility
1.0 Nonprofit Standard Mail
1.6 Eligible and Ineligible Matter
1.6.4 Prohibitions and Restrictions
Nonprofit Standard Mail prices may not be used for the entry of material that advertises, promotes, offers, or, for a fee or consideration, recommends, describes, or announces the availability of:
- Any credit, debit, or charge card … not authorized …
- Any insurance policy, unless the … policy is designed for and primarily promoted to the members, donors, supporters, or beneficiaries of that organization; and the coverage provided by the policy is not generally otherwise commercially available as explained in 6.5.
- Any travel arrangement, unless 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 prices; and the arrangement is designed for and primarily promoted to the members, donors, supporters, or beneficiaries of that organization.
- Any other product or service unless one of these exceptions is met:
- The sale of the product or the provision of such service is substantially related to the exercise or performance by the organization of one or more of the purposes used by the organization to qualify for mailing at the Nonprofit Standard Mail prices. …
- The product or service is advertised in Standard Mail material meeting the prescribed content requirements for a periodical publication. …
1.6.6 Definitions, Substantially Related Advertising Products
For the standards in 1.6.4d:
- Standards established by the Internal Revenue Service (IRS) and the courts with respect to 26 USC 513(a) and (c) of the Internal Revenue Code are used to determine whether the sale or provision of an advertised product or service, whether sold or offered by the organization or by another party, is substantially related to the qualifying purposes of an organization. …
- To be substantially related, the sale of the product or the provision of the service must contribute importantly to the accomplishment of one or more of the qualifying purposes of the organization. This means that the sale of the product or providing of the service must be directly related to accomplishing one or more of the purposes on which the organization’s authorization to mail at the Nonprofit Standard Mail prices is based. The sale of the product or providing of the service must have a causal relationship to the achievement of the exempt purposes (other than the production of income) of the authorized organization. (Income produced from selling an advertised product or providing a service does not make such action a substantially related activity, even if the income will be used to accomplish the purpose or purposes of the authorized organization.) …
- Announcements of activities (e.g., bake sale, car wash, charity auction, oratorical contest) are considered substantially related if substantially all the work is conducted by the members or supporters of an authorized organization without compensation. …
- Advertisements for products and services, including products and services offered as prizes or premiums, are considered substantially related if the products and services are received by an authorized organization as gifts or contributions. …