Target Analysis Group recently conferred with majornational fundraising organizations to discuss quarterlyfindings from the donorCentrics™ Index of NationalFundraising Performance. This research comparesindividual organizational trends to an index representing thetrend for all organizations participating in the service.Unlike survey information or attitudinal studies, the Index isdesigned to provide fundraising professionals and seniormanagement with a quantitative, data-driven, quarterlybenchmark of trends for key philanthropic indicators.

The report compares trends for key fundraising indicatorsfrom calendar years 2000, 2001, and 2002 for 28 largenational fundraising organizations. In 2002 alone, thisgroup of organizations had a combined total of more than 19million donors, more than 30 million gifts, and more than

$750 million in contributions. A summary of themethodology employed for the report, and more informationis available at www.targetanalysis.com.

Summary of General Observations

Forces affecting American donors and the population ingeneral led to overall declines in 2002 charitablecontributions to Index organizations. Unemploymentcontinued to creep up while equity markets floundered.Anxiety about world events, fear of domestic terrorism, andrising energy prices contributed to one of the worst year-endholiday shopping seasons in recent years. Furthermore,scandals involving the conduct of religious leaders, anddebate about the proper distribution of funds collected inresponse to 9/11 weakened hard-earned public trust towardcharities in general. Most evidence, however, indicates thatthe majority of donors were not disillusioned and continuedto support their favorite causes. (See Chart 1, page 4.)

For many organizations participating in the Index, 2002was a reversal of a trend toward more revenue from fewerdonors. Viewed in aggregate, these 28 organizationsincreased their donor base by 0.6% but saw total revenuedrop 3.6% after modest but consistent gains in 2000 and2001. When organized by sectors and medians, however (see later sections of this report), the dominant trend forboth donors and revenue is downward.

Despite many factors that would predict otherwise, andallowing for fourth-quarter philanthropic giving that failedto keep pace with the modest Q401 and Q102 rebound after9/11, public support of our Index organizations weakenedslightly, but did not collapse.

ALSO IN THIS ISSUELetter from the Chair . . . . . . . . . . . . . . . . . . . 2

Sending Out Campaign Mailat a Discount. . . . . . . . . . . . . . . . . . . . . . . . . 10

The Cooperative Mail Loopholeand the Death(?) of Preferred Rates . . . . . . . . 12

NEW FEATURE: Member Spotlight . . . . . . . 14

Disaster Recovery Planningfor Nonprofits . . . . . . . . . . . . . . . . . . . . . . . . 16

Public Policy Scorecard . . . . . . . . . . . . . . . . . 20

Public Inspection of Annual Returnsand Applications . . . . . . . . . . . . . . . . . . . . . . 22

Volume 6, Number 2 June 2003

JOURNALJOURNALO F T H E D M A N O N P R O F I T F E D E R A T I O N

Continued on Page 4

Index of National Fundraising Performance ShowsOnly Minor Declines in 2002 Despite a Tough Economy,

Domestic Scandals, and International TensionTarget Analysis Group

2

ChairKory ChristiansonSt. Joseph’s IndianSchool

Vice-ChairLarry MayMay DevelopmentServices

MembersKelly BrowningAmerican Institute for Cancer Research

Ron BrowningVeterans of Foreign Wars(VFW) of the U.S.

Christopher CleghornEaster Seals

Bobby DeanCal Farley’s Boys Ranchand Affiliates

Connie DeBordDeBord and Associates

Jack DoyleAmergent

Craig FloydNational LawEnforcement OfficersMemorial Fund

Barry GiaquintoNorth Shore AnimalLeague America

Raymond GraceCreative DirectResponse Inc.

Max HartDisabled AmericanVeterans

Karyn JohnsonMoore Response Marketing Services

Lindy LitridesLitrides & Associates

Michael LittMichael B. Litt, CFRE

Lori LueckenhoffExperían

Mary Beth McIntyreTarget Analysis Group

Dennis MeyerMeyer Partners

Sherry MintonAmerican HeartAssociation

Kristin MooreElderhostel, Inc.

Angie MooreAmerican Cancer Society

Pegg NadlerConsumers Union

Mark SchulhofQuadriga Art Company

Nick StavarzSynergy Direct MarketingSolutions

Sue SwordChristian AppalachianProject, Inc.

StaffSenny Boone, Esq.Executive Director

Helen LeeOperations Manager

Jill MurphyMember ServicesManager

“Kites rise highest against the wind — not with it.”

Winston Churchill

It is doubtless a challenging time for many nonprofitorganizations. Uncertainty has reigned for much of the year,whether from international political issues of potentially greathistorical importance, or domestic economic issues acutelyaffecting some of our organizations. Let’s take a quick look atsome of the challenges we face.

First, the states have always been active, but today they seemparticularly zealous in pursuing nonprofit organizations they deemhave extraordinary fundraising costs. One case of substantialimportance recently went to the U.S. Supreme Court from Illinois(as of this writing the court’s opinion has not been issued).

The case before the Court involved the use of professionalfundraisers by charities, to determine whether such fundraisers canbe pursued under fraud statutes when they do not disclose to theirpotential donors the actual percentage of funds that go to thecharity. In this case, the Attorney General alleged that since thefundraisers retained 85 percent of the funds solicited, withoutinforming donors of this fact, they were guilty of common lawfraud, and breach of fiduciary duty, as well as claims under theSolicitation for Charity Act and statutory consumer law. This casehas landmark and substantial implications for all of us.

Second, postal rates may not be increased until 2006 — or willthey? The House of Representatives considered HR 735, thePostal Civil Service Retirement System (CSRS) Funding ReformAct of 2003 (as of this writing, no legislation has been signed intolaw). The legislation will provide a new payment schedule forretiree benefits under the CSRS. The savings generated from thepassage of this bill will allow the U.S. Postal Service to freeze postalrates until 2006.

If this legislation is passed and signed into law, nonprofitorganizations that utilize direct mail will continue to mail at ourcurrent lower nonprofit rates until perhaps 2006. If the legislation

Letter from the ChairKory Christianson, Director of DevelopmentSt. Joseph’s Indian School

The 2002 – 2003 LeadershipFollowing are the members of the The DMA

Nonprofit Federation’s Advisory Council with leadership responsibilities:

UPCOMING EVENTS!2003 NEW YORKNONPROFIT CONFERENCE August 12 – 13, 2003Waldorf AstoriaNew York, NY

does not pass and therefore is not signedinto law, it is quite likely — really acertainty — that a rate case will be filed next year with possible across-the-board rate increases of approximately 10 percent.

Third, the Federal TradeCommission will establish a nationaldo-not-call registry. Using this registry,consumers will be able to opt-out oftelemarketing calls from for-profitcompanies. It is possible that 60million consumers will sign up withthis registry once it is established.Nonprofit organizations and theirfundraising partners are exemptedfrom the registry. However, they mustdisclose honestly and in a clearmanner: a) the identity of theorganization on whose behalf thesolicitation is made; and b) that thepurpose of the call is to solicit acharitable contribution.

Finally, nonprofit organizations thatuse mail or depend on foundationgrants for support are encounteringchallenges as well. The economicuncertainty due to war in Iraq has hada varying degree of negative impact onorganizations — particularly in themonth of March. Also, as the stockmarket fell the last several years, fundsavailable from private foundations werereduced — therefore reducing grantsavailable to charitable organizations.There simply hasn’t been as muchmoney to disburse. We ourselves haveseen the effects of both aforementioneditems at St. Joseph’s Indian School.

Amidst all of these challenges, TheDMA Nonprofit Federation stands readyto continue its service to the nonprofitcommunity. We know by joiningtogether, we can defeat overzealouslawsuits; we can effect positive change incongressional legislation; we can help

protect the free speech rights of nonprofitorganizations; and we can provideeducation to share the successful directmail fundraising tactics necessary to raisefunds in support of our worthy programs— even in times of uncertainty.

Indeed, our industry can rise aboveour current challenges, like a kite againstthe wind, to a more prosperous andsuccessful future. If you aren’t a member,please consider joining The DMANonprofit Federation today. A new chairand vice-chair will lead our AdvisoryCouncil effective July 1, 2003. I amexcited for them, and the great leadershipthey will provide.

We are working hard to be thepremier direct marketing organizationserving the interests of the nonprofitcommunity. Please contact me directlyat kchristianson@stjo.org if you areinterested in joining our effort. �

3

For more information, or sponsorship opportunities,contact Helen Lee at 202.861.2496.For the latest updates, Visit our Web site at www.nonprofit-conf-ny.org

Attitudinal surveys reported in TheNonProfit Times (NPT) confirm trendsalready evident in previous editions ofthe Index: Americans are changinggiving behavior in response to negativeeconomic and unemployment news,but plan to continue to supportchildren’s literacy, and health causes.The Wirthlin study reported in NPTindicated that some Americans plannedto increase donations to internationalrelief services if war occurs in thePersian Gulf.

In addition to environmental factorssuch as the economy, and domesticand world events, organizations facedemographic changes from an aging

population, and different culturalattitudes toward philanthropy amongbaby boomers and ethnic groups. Thenational political debate aboutreproductive rights, relaxation ofenvironmental policies, reduced federalcultural funding, and drastic statefunding cuts to local education andhuman services will also prompt shiftsin donor behavior. And increasingethnic and demographic diversitypresents opportunities fororganizations able to identify and reachnew audiences with relevant andcompelling messages.

Representatives from Indexorganizations indicated that theaftermath of 9/11 taught them to “staythe course” of fundraising andminimize changes in strategy based onwar or terrorist events. Some planned

to split the dates of large springmailings in order to hedge against thelikely outbreak of hostilities, andreduce telemarketing for a day or twoimmediately following large-scalemilitary operations. Almost allorganizations agreed that they shouldreturn to normal fundraisingoperations as soon as possible. Whenasked about budget planning for theyear ahead, many stated that currenteconomic and donor behavioral trends,but not short-term domestic orinternational crises, will dictate tighterbudgets, more conservative acquisitionplans, and revised revenue targets fortheir next fiscal year.

The median number of donorsdeclined 2.4% in 2002 compared to2001 after an increase of 2.2% above2000. The Health Sector, which

4

Index of NationalFundraising Performance…Continued from Page 1

Chart 1

lagged in the National Index in 2001,reversed its direction and showedmodest growth in 2002. (See Chart 2, right.)

Median Revenue: More Than Half of theOrganizations ExperiencedDecreased Revenue

National median revenue for 2002declined 3.6% compared to all of2001, while the Membership Sectorsaw another year of decline, and theHealth Sector remained essentiallyflat. In the prior review periods, theIndex showed that an increase inaverage gift and revenue/donormetrics was offsetting the donordecline. The close of 2002 finds us ata crossroads. Both donor numbersand value are in decline, asorganizations continue to face

challenges on all fronts to maximizesupport from donors, identify andreactivate their best lapsed prospects,and seek out and engage potential newdonors. Despite a small increase inaggregate donor counts, there was aslight decline in aggregate gifts andgifts per donor in 2002. As we’ll seelater, however, many organizations did

report more gifts per donor. For thefirst time in many years, revenue perdonor went down as well, though2002 amounts remained above 2000.Economic conditions of the past yearseem to be driving donors towardpredictable behaviors: fewer andsmaller gifts.(See Chart 3, below.)

5

Continued on Page 6

Chart 3

Chart 2

6

Median revenue per donor for 2002 declined 1.3% from 2001 for theNational Index. This is the firstquarter showing a decrease in medianrevenue per donor across the entireIndex. The Health Sector ran counterto this trend, but their average revenueper donor was already the lowestamong sectors, at only $27.94,compared to the Index median of$39.81. Also worth noting is the factthat the average revenue per gift toHealth charities in 2002 was $20.46,compared to the National average of$25.00 — perhaps evidence of growingprice point resistance among manydonors. (See Chart 4, left.)

Organizations often find thatretained donors offer the most stablerevenue source during times ofeconomic uncertainty, and the median number of retained donors wasup slightly in 2002 across all sectorsexcept Membership. The medianrevenue per retained donor forMembership organizations in 2002 was $72.36, compared to $46.92 for donor organizations,suggesting price resistance due toeconomic anxiety. (See Chart 5, page 7.)

The Median donor retention rate for 2002 fell 0.5% compared to 2001.Median new donor retention was down 2.4% in 2002 compared to2001. There was a 1.5% drop in themedian multi-year donor retention rate for 2002 compared to 2001. The improved 2002 performance of Membership and Health is in

Index of NationalFundraising Performance…Continued from Page 5

Chart 4

stark contrast to opposite trends in2001. (See Chart 6, right.)

The median decline in new donorswas down 7.8% for 2002. In the lastupdate before this report, new donorswere down 14.8%. The improvementin donors is not surprising, since thisfigure is being compared to thatrecorded at the end of 2001, whichincluded the impact of 9/11 and theAnthrax scare. Median new donorrevenue was down 8.3% compared to2001. Median revenue per new donorwas down 2.7%. (See Chart 7, right.)

The median number of reactivateddonors was down 2.6% in 2002compared to 2001, but that was after amedian 16.5% increase in 2001.Lapsed donor files continue to be animportant asset, if organizations useeffective data mining techniques toefficiently select the most likelyprospects for reactivation. (See Chart8, page 8.)

Concluding Remarks

While 2002 fundraisingperformance levels fell from the high-water marks established in 2000and 2001, Index organizations as agroup fared remarkably well comparedto many private sector trends inemployment, financial markets,consumer confidence measurements,and retail sales. Retained donorscontinued to provide a solid mooring in shifting seas while new donor acquisition yieldeddisappointing results.

Many organizations expect to reducecold mail investments next year inorder to preserve net revenue. Theoutlook for telemarketing is mixed,

with some organizations planning togear up, while others employ predictivemodeling or other segmentationstrategies to improve the efficiency ofslightly reduced activity.

Many organizations report verypositive trends from Web giving,especially revenue per donor andretention rates, but e-mail renewals and

7

Chart 6

Chart 5

Chart 7

Continued on Page 8

8

Web site revenues are still a tinyfraction of overall giving for mostorganizations.

The exceptional reactivation success of2001, driven in part by widespreaddeployment of predictive response modelsand sophisticated data mining, was nearlyrepeated in 2002. The small reactivationdeclines can be interpreted as only slightlyless successful than the previous year, andwell ahead of pre-2000 levels.

Looking Ahead

This article was written just asPresident Bush announced his ultimatumto Iraqi leaders and the Dow JonesIndustrial average reclaimedapproximately 500 points in the week

before hostilities were expected to begin.While the fundraising climate in the firsthalf of 2003 promises to be turbulent,this report shows that donors andfundraisers proved capable of weathering2002 storms rather well.

The next installment of the NationalIndex of Fundraising Performance will

focus on the first quarter of 2003compared to 2002 and 2001. Findingswill be announced in mid-June 2003, andposted to www.targetanalysis.com. �

Target Analysis Group wishes to thankthe 28 organizations participating in thedonorCentrics™ Index of NationalFundraising Performance.

Index of NationalFundraising Performance…Continued from Page 7

Chart 8

Maintaining a healthy donor file is critical to cultivating strong relationships, and strong relationships are the key to successful fundraising. Our Vital Signs Analysis will help you identify your most valuable relationships and advise you on the best ways to cultivate and nurture them. Just ask any of these clients:

Archdiocese of Baltimore, Fox Chase Cancer Center, Greater Chicago Food Depository, Catholic Medical Mission BoardFor more information about Amergent’s Vital Signs Analysis, and to see ifyou qualify for a FREE Vital Signs (a $15,000 value), call Kendra Raymond at 800.370.7500. Amergent, supporting the direct marketing and database management needs of non-profit organizations for more than 20 years.

Amergent, 9 Centennial Drive, Peabody, MA 01960 Fax: 978.531.0400 http://www.amergent.com

We Make House Calls!Let Amergent Evaluate Your Donor Data.

Finding donors is one thing. Bonding them with your passion

for changing the world is another thing altogether. Your

cause is important. And it’s absolutely critical to building

loyalty. That’s because your best donors are the ones who

are emotionally engaged with your cause. Do you know if you

are acquiring quality contributors really connected to your

cause, or just “buying” a file that gives out of obligation?

The Domain Group has strategies that will deliver loyal

donors who will be there for the long haul. Find out how you

can change your fundraising while you change the world!

701 PIKE STREET, SUITE 700 • SEATTLE, WASHINGTON 98101 • PH: 206-682-3035 • www.thedomaingroup.com

Will your donors be there for you tomorrow?

An obscure nonprofit group istransforming the way campaign mail issent to California voters by sellingaccess to its discount mail permit.

By sending campaign brochuresthrough the Policy Issues Institute inIrvine, political consultants save 15%to 20% on mailing costs because ofdiscounts the U.S. Postal Service givesto nonprofits, according to asolicitation sent out by the institute’spaid marketer and political mail guruBill Butcher. Financial records releasedby the institute show that those savingswere significant enough thatconsultants paid $2.3 million to theinstitute for such purposes during lastyear’s elections.

So far, the institute has been usedonly by consultants who sellendorsements to political campaignsfor tens of thousands of dollars, thenflood mailboxes with fliers urging avote for their candidates or causes.Bearing the title of the institute,millions of these fliers, called slatemailers, reached California voters’mailboxes in November.

To satisfy federal requirements that 25% of each mailer address thenonprofit’s issues, the pamphlets had a page on policy matters. Theremaining space was devoted toendorsements of candidates, who ranged from contenders forjudgeships to Gov. Gray Davis and his Republican challenger, Bill Simon Jr.

Though the practice deprives thePostal Service of hundreds ofthousands of dollars in revenue,officials there say it appears to be legal.Scott Jones, manager of business mailfor the Santa Ana post office, said thatIRS-approved nonprofits whosemailings meet basic standards, such asthe 25% content minimum, can dowhat they want to.

“If they meet these various criteriathey can have pretty much anyadvertising in there,” he said.

Attorney and Dana Point CityCouncilman James Lacy, who foundedthe institute in 2001, said the mailingsare a means of including policydiscussion in campaigns. “We try to

elevate the campaign season byinjecting some words about a policyissue,” he said.

And “this does enable organizationsto take advantage of a lower overallcost,” he added. “Doing so is totallyconsistent with the 1st Amendment,the IRS requirements, and U.S. postal regulations.”

Some consultants are troubled bythe novel approach. “I’m sure that this policy issues group is following the letter of the law, but I’m sure it’snot the spirit of it,” said Sacramentoconsultant Natalie Blanning, whosefirm publishes a mailer for a groupcalled the Nonpartisan CandidateEvaluation Committee. Her companyrejected Butcher’s pitch to send its pieces through the Policy Issues Institute.

Consultants say the idea of using anonprofit for political mail has beendiscussed for years, but no oneundertook it until the letter went outlast year from Butcher, a pioneer in thedirect mail industry who has earnedmillions of dollars soliciting donationsfor groups like the Howard JarvisTaxpayers Association. �

Text of the full Los Angeles Times articlecan be ordered (for $2.50) at the LosAngeles Times web site www.latimes.com.Scroll down to the Archives link (lower leftof the home page), and type “Sending OutCampaign Mail at a Discount” into thearchives search field.

10

Sending Out Campaign Mail at a DiscountNicholas Riccardi, Excerpted from the full article first published February 24, 2003, Los Angeles Times.

Do we have your most

updatedinformation?

Please fill out the form on page 13.

A division of Direct Media, Inc.

200 Pemberwick Road • Greenwich, CT 06830Tel: 203-532-1000 • Fax: 203-532-1654 • lmay@directmedia.com

MDSMAY DEVELOPMENT SERVICES

May Development Services specializes in the design and implementation of direct response fundraising campaigns with an industry-wide reputation in health-related, social service, and religious causes.This year alone, MDS will participate in the creation of more than 350 million direct mail fund raising appeals.

Our clients range from small community-based organizations to many of the largest, best-knownnational nonprofits. Some have been our clients, and friends, for more than 20 years.

Services include:• Strategic planning• Copywriting and design• Print production & lettershop management• List brokerage & management• Data services• Response analysis

MDS is a division of Direct Media, Inc., the largestprovider of mailing list brokerage and managementservices worldwide.

• Larry May, CFRE • Diana Estremera • Lauri Palladino • Graham Hunter • Mike Kertelits • Linda Ferruzzi• Don Austin • Don Kuhn, CFRE

Following is the text of an op-ed pieceby Phil Claiborne in April, 2003 forElks Magazine. This article is written in response to an L.A. Times articlereprinted in part on page 10 of this Journal.

In spite of the fact that nonprofitdirect mail content must besubstantially related to a nonprofit’smission to qualify for preferred postage,many Nonprofit Standard Mailnewsletters include unrelatedadvertising. The display advertisingexception1 allows it.

Nonprofits qualify for the exceptionby conforming to the contentrequirement of a periodical.2 Forexample, a religious bulletin mightcarry an ad for a funeral home, or anElks Lodge newsletter might have adsfor muffler shops, realtors, or generalcontracting. These ads for productsand services have nothing to do withthe nonprofit directly, but helpunderwrite the cost of printing andmailing. Congress thought it should bethis way.

Nonprofit Standard newsletters tendto have a constant circulation, exceptfor additions and removals involvingroutine list maintenance. Theircirculation is typical of the Institutionand Societies Periodicals subclass(member-based); the General subclass(paid subscriptions); or the Requestersubclass (free to those who ask for it).It is not unusual for additional copies

to mail off-list for promotion, or bedistributed at conventions; suchdistribution, however, is ancillary toregular circulation.

The display advertising exceptiondefines eligibility on content alone.Circulation and frequency are notrestricted. This allows a one-timeNonprofit Standard Mail piece to bedistributed to anybody with a vaguerelationship to the nonprofitorganization. The mail only has tolook like a periodical.

The recipients are not limited in anyway by membership, a subscription, orrequest. Left unregulated, thisadvertising exception may pop upeverywhere. The nonprofit can sell75% of its editorial space, charging theadvertiser enough to print and mail thepiece, pay the postage — taking intoaccount a 40% reduction in rates —plus make a “profit.” If there is abroker involved, their fees are paidfrom the savings within this unique

relationship built on reduced postage.The scheme amounts to a cooperativemailing3, using the term loosely aswhen frequency is minimized and listflexibility is maximized to meet theadvertiser’s goal primarily and thenonprofit’s goal technically.

Using your imagination, how hard isit to envision partners that mightexploit this arrangement? An automanufacturer might partner with anational safety organization, forexample. The safety organization, a nonprofit, might be willing topromote their message to whomeverthe auto manufacturer wants to sell to as well. It is easy to imagine thistype of arrangement, and other similarpartnerships. A smart advertisingbroker might develop a matrix ofadvertisers and nonprofits by category.

These types of mailings have alreadyoccurred in a few campaigns for publicoffice in California (see page 10 of thisissue of the Journal), so we know thisapplication of the advertising exceptionis real, not theory. Some Californiacampaign consultants have balked atthis technique, however. I wonderwhat the rest of the nonprofitcommunity thinks?

Apparently, this application of acooperative mail loophole was neveranticipated by Congress or the U.S.Postal Service (USPS) when thecooperative mail law was developed and

12

The Cooperative Mail Loophole andthe Death(?) of Preferred RatesPhil Claiborne, Circulation Director, Benevolent & Protective Order of Elks of the U.S.A.

A nonprofit mission to “educate the public”

might have a very large audience.

Anybody or everybody might

qualify.

approved. If the loophole grows inpopularity, will the integrity ofnonprofits erode? Could we eventuallylose the preferred nonprofit mailingrate because of it? On the other hand,perhaps we have found a new fundingsource that might actually stimulatepostal revenue by growing volume.

As intriguing as the concept is, thistechnique is not in the best interest ofnonprofit mail. I believe it should bedebated within the associations to aconsensus while we probe the USPSon their intention (or ability) to close this loophole. Maybe this needs a legislative fix.

If the nonprofit’s goals are viable andimportant, not just a front foradvertising mail, then this could be agood thing. If not, it has the potentialto divert existing advertising mail fromthe commercial rate (a bad thing). �

Phil Claiborne is the CirculationDirector of the Benevolent & ProtectiveOrder of Elks of the U.S.A. He can bereached at philc@elks.org

1 [DMM 57 E670.5.8, a-d][USC Title 39, IV,

35, II, Section 3626 (j).1.D.ii.III].

2 Meeting the content requirement of a

periodical means there must be a title on the

front page, be comprised of printed sheets,

consist of 25% non-advertising, and have an

identification statement on one of the first five

pages, including title, issue date, frequency,

name and mailing address of the (authorized

nonprofit) publisher; issue number (eg, Vol.

IV, No. 10); International Standard Serial

Number (ISSN) if applicable; and

subscription price, if applicable.

3 Cooperative mailings are still generally

prohibited, as described in USPS Customer

Support Ruling PS-209 [DMM E670.5].

13

Please help us keep ourrecords up-to-date!

Name ______________________________________________

Organization ________________________________________

Title ________________________________________________

Address ____________________________________________

City, State, Zip ______________________________________

Telephone____________________________________________

Fax __________________________________________________

E-Mail ______________________________________________

Web Site ____________________________________________

Additional Contacts:

______________________________________________________

______________________________________________________

______________________________________________________

______________________________________________________

14

Mission

The mission of the National Law Enforcement Officers Memorial Fund is to generate increased public support for the law enforcement profession by permanently recording and appropriatelycommemorating the service and sacrifice of lawenforcement officers; and to provide information that will help promote law enforcement safety.

This issue, we recognize:

National Law Enforcement Officers Memorial Fund

The National Law Enforcement Officers MemorialFund (NLEOMF) was established in June of 1984 by U.S. Rep. Mario Biaggi (Ret.), a legendary New YorkCity police official.

In 1991, the NLEOMF established the National LawEnforcement Officers Memorial in Washington, D.C.The Memorial is a beautiful three-acre park thatincludes the names of 16,000 federal, state and locallaw enforcement officers who have been killed in the line of duty.

A new feature highlighting federation members

15

In 2000, the NLEOMF was authorized by the U.S. Congress to build aNational Law Enforcement Museum on federal land across the street fromthe Memorial. The Museum is scheduled for completion in 2008.

Key Officials

The Chairman and ExecutiveDirector of the NLEOMF is Craig W. Floyd. The NLEOMF board of directors is comprised of top officials from 15 national lawenforcement organizations. �

Contact Information:National Law Enforcement Officers Memorial Fund, Inc.400 7th Street, NWSuite 300Washington, DC 20004Phone: 202.737.3400Fax: 202.737.3405info@nleomf.comwww.nleomf.com

ARE YOU A MEMBER OF THE DMA NONPROFIT FEDERATION? Membership in The DMA Nonprofit Federation brings with it these and other benefits:

• Discounts up to 40% off of non-member fees for The DMA’s Nonprofit Federation conferences

• Discounts up to 33% off on publications

• Members-only online newsletter

• Members-only section at The DMA and The Nonprofit Federation Web sites

• Access to The DMA online database

• Access to The DMA research studies and projects

• Help with nonprofit postal and regulatory problems

• Nonprofit advocacy programs with state and federal agencies

• Quarterly Journal...and much, much more

Contact The DMA Nonprofit Federation at 202.628.4380 E-Mail: nonprofitfederation@the-dma.orgWeb site: www.nonprofitfederation.org

What Good is a Successful Fundraising Campaign if the Charity Isn’t Around to Use it?Disaster Recovery Planning for Nonprofits

Michael Robinson, IT Director, Creative Direct Response

16

Disaster recovery planning, whilenot an entirely new concept, hasgained increased attention since theevents of 9/11 and the formation ofthe Department of Homeland Security.As suggested by the early results of anonline survey1, however, the topic hasnot become an established one in thenonprofit community. Whilenonprofits may not seem to beintentional targets of attack, or morevulnerable than their commercialcounterparts to disasters of this type,they are in actuality no less susceptibleto these types of occurrences.

A disaster can take the shape of an event other than a terrorist attack — such as a naturalphenomenon like a fire, flood,earthquake, snowstorm, or tornado.Disaster can also be the result of faulty equipment, such as interruptedutility service (gas, electricity,telephone, or Internet connection) or computer network malfunction. Itmay be an issue related to the humanoperational side of the nonprofit, such as the loss of key personnel, awork-related accident, theft of files

or equipment, or even a dreadedfinancial scandal.

In short, disasters can take on manyforms and can vary in size from minorincidents to major catastrophes. Anefficient disaster recovery plan can bedesigned to protect the entirenonprofit — its employees, systems,and information — in the event of amajor disaster (or minor disruptiveincident), so that the organization canresume its philanthropic activities asquickly as possible. Yet, it appears that nonprofits have not developeddisaster recovery plans as quickly astheir government or commercialcounterparts. Why are nonprofits not prepared? Reasons may includethe initial fear of dealing with disasterrecovery, a sense that it won’t happento them, or a lack of understanding of the issues involved.

Still, the threat of a disasterhindering or halting the work ofnonprofits is very real, and until it is adequately addressed, nonprofitsare at risk. Your charity’s mission isimportant enough for you to work for it; isn’t it important enough to safeguard?

Is the need for a disaster recoveryplan real? — Disaster recoveryplanning is not a luxury for nonprofitorganizations — it is essential.

Nonprofits do not have large reservesto carry themselves through difficultsituations. Often funds are limitedand resources are scarce. A devastatingevent could wipe out any existingbudget. The B&O Railroad Museumexperienced such a situation this pastFebruary. The museum, located inBaltimore, Maryland, was the victim of a disaster when its roof collapsedunder the weight of heavy snow.Several irreplaceable exhibits weredamaged or destroyed. Repairs were estimated around $4 million, and it was unlikely that insurancewould cover all expenses. The museum experienced a terrible setback.Compounding matters was the factthat a fundraising gala was to havebeen held at the facility two weeks after the roof collapse. The event hadto be cancelled.

If a similar tragedy were to strike thehome office of your nonprofit, wouldit survive? Providing adequateprotection for a nonprofit to deal withsuch an occurrence takes both timeand money to implement, but the costdoes not need to be exorbitant. This isan important fact to note, because theincreasing pressure of financialaccountability is weighing heavily onthe minds of today’s nonprofitexecutives. As a result, necessaryequipment — something as simple as

1 Creative Direct Response is currently

conducting a survey on the practices of

nonprofits’ disaster recovery planning

efforts. To participate in the survey,

please visit http://www.cdr-nfl.com/

disaster_recovery_survey.htm.

tape drives (and a supply of tapes) — is often at the bottom of expenditurelists. Many charities pass the task ofimplementing a disaster recovery planalong to the computer department,assuming that the issue is only atechnological one. However, not allvaluable information and proceduresare in electronic form.

The process of creating andimplementing a plan is itself also theproduct of good planning. The need isall too real, but developing a plan oftenfalls to the wayside.

According to statistics released bySecurity Education Systems in January2002, 50% of any given community’sbusinesses would be out of business if a disaster were to strike the region.This does not bode well for thenonprofit sector.

In disaster recovery measures, time isof the essence. Mainframe Week, IBM,and The Wall Street Journal reported in 2002 that of the companies thatexperienced between two and five daysof downtime without a disasterrecovery plan:

• 25% went bankrupt immediately;

• 40% closed their doors within thenext two years;

• Of the 35% remaining, nearlynone were around five years afterthe disaster.

The basic cycle of events in a disas-ter and recovery — Not only is itimportant to have a disaster recoveryplan in place; that plan also needs to beboth effective and quick to implement.Gaining knowledge about how a disas-

17Continued on Page 18

BEYOND ROI FOR FUNDRAISERS• Learn 3 ways to add credibility to

your appeals.

• Discover when and where to put the "ask" in a letter.

• Find out which 5 mail formats workalmost every time.

• Learn how to cut production costs without sacrificing results.

• Discover testing strategies fundraiserscan use to improve appeals over time.

• Understand why your goals should includeimproving Return on Investment.

Put the experience of Horah Development Solutions

to work for you!

Call today, 212-921-4521, and ask for Brian Wagner.

Or visit us online at www.horahdevelopment.com

ter will affect a nonprofit, how long itwill take to restore systems, and how itwill impact employees is essential.

Before rushing off to form a plan, it isimportant to understand the variousphases that occur from the time a disasterhits to the time that normal operationsresume. Each phase has uniquecharacteristics — although the length ofeach will vary from disaster to disaster. Agood disaster recovery plan will addresseach phase of the recovery process:

• the disaster;

• your immediate response;

• short- and long-term recovery;

• resumption of normal activities.

Starting Points

• Disaster planners must recognizethat not every part of a nonprofitcan be restored instantly followinga disastrous event.

• A good disaster recovery plan willtake time to develop andimplement, and require someeffort to remain updated.

• A team will often oversee thecreation of Standard OperatingProcedures and conduct audits ofall systems.

•There are a number of tools andresources to use in the developmentof a disaster plan. Following is astarter checklist of items to assist acharity in developing its owndisaster plan.

Disaster Plan Checklist

Has the charity backed up its legaldocuments? — Nonprofits arerequired to keep the last three years’worth of 990s, their tax exempt appli-cations, and by-laws for public inspec-tion. A copy of those documentsshould be kept off-site.

Does the organization have copies ofsigned contracts and other importantdocuments? — A copy of these docu-ments should be stored off-site along witha copy of the nonprofit’s insurance policy.

What constitutes proof of ownershipand proof of loss? — Insurance compa-nies have different standards regardingwhat constitutes proof of ownership andproof of loss. Inventory lists are essen-tial and often used for depreciation cal-culations, but they may not be enough.Some insurance companies require serialnumbers, and copies of receipts, andprefer pictures of all on-site equipment.

Is the organization creating a back-up of the computer systems? — Muchof a nonprofit’s data is stored on bothnetworked servers and PCs. Some ofthe data even makes it to CDs and flop-py disks, which sit on bookshelves.With all of the hiding places for data, itis easy to overlook some importantpieces of information.

Is at least one copy of the computerback-up stored off-site at all times? —If an employee who is responsible forsafely transporting a back-up tape leavesit in his or her drawer for the day,it could be the very day that theinformation is lost.

Does the organization need to pur-chase redundant equipment? —Computer equipment can quickly

18

Diaster Recovery Planningfor NonprofitsContinued from Page 17

At the HEART of successful donor and member programs……is a direct marketing agency that workshand-in-hand with you. An agency withexperience from your side of the desk, providing the professional, personal serviceyou deserve. That agency is DMW.

Unlike agencies that “sometimes” work foran occasional nonprofit client, fund raising isat the heart of our business on a daily basis.

Organizations large and small look toDMW for cost-conscious, efficient directmail, DRTV, e-mail campaigns, databaseadvice and more. You should, too!

Partner with an agency that has its heartin your business and your business at heart— DMW. Contact us today!

Erica Waasdorp, VP Fund RaisingTom Hurley, President Nonprofit GroupDMW Worldwide, LLCCordage Commerce Center36 Cordage Park Circle, Suite 225Plymouth, MA 02360Tel. (774) 773-1200Fax (774) 773-1210E-mail:ewaasdorp@dmwdirect.comE-mail: thurley@dmwdirect.com

www.dmwdirect.comA direct Marketing Agency

™

PARTICIPATE in The DMA Nonprofit Federation by:

• Writing an article• Help plan a conference• Sponsoring an event

LEARN MORE by calling202.628.4380

19

become obsolete and incompatible withnewer devices. If the sole back-up deviceis damaged, back-up tapes are useless.Some smaller nonprofits use legacyequipment to run old software. Theseprograms may not run on new machines.Redundant equipment may be requiredto ensure that all data are accessible.

Will the organization be able torun its custom software and databasesin a new environment? — Many char-ities, especially larger organizations,have invested considerable time andmoney in developing custom applica-tions and databases. Care should betaken to make sure the software can bere-installed on new equipment.

How will the organization commu-

nicate with employees following a dis-aster? — The nonprofit should consid-er creating a phone tree or housingannouncements on a private area of theweb site so it can effectively communi-cate with off-site employees. Phonenumbers for employees are oftenlocked away in the filing cabinets ofthe HR department. Those numbersaren’t always accessible in a crisis.

Has the organization tested thedisaster recovery plan? — A disastershould not be the first time yourorganization tests the strength of itsplan. Make a point to test the proce-dures of the plan.

Help yourself first — Charitiesshouldn’t become so busy with helping

others that they forget to take care ofthemselves. Developing a disasterrecovery plan will make sure that thenonprofit will continue its efforts evenafter a disruption. �

Michael Robinson currently serves asIT Director at Creative Direct Response(CDR). He is an instructor at the CDRTraining Academy, has authored severalarticles and holds a number of computercertifications. In addition to his responsibilities at CDR, Michael is alsoan adjunct instructor at Anne ArundelCommunity College in the School ofBusiness, Computing and TechnicalStudies. He can be reached at mrobinson@cdr-nfl.com

Build stronger donor connectionsUse eMarketing Solutions from Experian to make your programs connect offline and online

To attract and build successful donor relationships, you need to understandexactly what consumers want from youonline. This enables you to know theirwants and needs, in real time, and thencustomize your communications andappeals to their individual needs.

Experian’s eMarketing Solutions give youthe online tools you need to:

• Enhance relationships by adding e-mailaddresses to your current donor database with e-Mail Append

• Acquire more donors online with eList — our permission-based targetede-mail acquisition lists

• Deliver and manage highly targeted,relevant and personalized e-mail communications and newsletters usingContactMailSM

• Keep your e-mail database up to datewith eCOA, our e-Mail Change ofAddress service

• Verify consumer name and addressimmediately to enhance your databasequality with Visitor Solutions

Relationships with your constituents is keyto your organization. At Experian®, ourbusiness is helping you communicate effectively with them. eMarketingSolutions give you the ability to build even stronger relationships with your constituents via an additional communications channel.

Connect with more donors online. ContactExperian® at 800 265 5098 or e-mail atFundRaisingServices@experian.com for moreinformation and to receive your free whitepaper, “ePower: Getting the Most FromYour Multichannel Marketing Efforts.”

For questions or comments, contactSenny Boone, DMANF ExecutiveDirector, at 202.861.2498, orsboone@the-dma.org

Nonprofit Public Policy Issues

This is a critically important year fornonprofit organizations in the publicpolicy arena, particularly as issuesrelating to postal rates and service,privacy, and fundraising are shaped.The DMA Nonprofit Federation(DMANF) is involved in protectingyour interests in Washington, DC,before state legislatures, and before theU. S. Postal Service (USPS).

� Fundraising: The U.S. Supreme Court heard Madigan v.Telemarketing Associates, which pres-ents the following legal question:Whether the First Amendment barsa state from pursuing an action forfraud against a professional fundrais-er soliciting contributions on behalfof a charitable organization, whenthe allegation of fraud is based solelyon the fact that the fundraiserdescribed to prospective donors thecharitable purposes for which fundswere being collected, withoutdivulging the percentage of grosscontributions that the charity wouldpay the fundraiser for its services.

For over a dozen years, the stateshave sought ways to control

fundraising costs of charities byestablishing a percentage-based cost offundraising ratio. This case impacts allforms of fundraising despite the factsof the case, which involvedtelemarketing appeals. If we lose,states will pursue charities for fraud ifthey do not disclose their costs offundraising to potential donors. TheDMANF has submitted an amicusbrief seeking to protect charities fromsuch state actions. We have asked thenonprofit community to sign on to theamicus brief effort, resulting in thelargest list of nonprofit supporters inthe Supreme Court’s history. Thedecision is expected in early June.

�Postal Rates: As of this writing, both the U.S. House of Representatives and the U.S.Senate have passed legislation tochange the funding formula for theUSPS’s payment into the CivilService Retirement System (CSRS).President Bush is expected to signthe bill. It is a victory for nonprofitmailers and the mailing community,since it will save nonprofits millionsof dollars in potential rate increases.The USPS promises not to raise rates until 2006, which means thenext rate case will likely be filed in2005. The DMANF worked withthe mailing community to securepassage of this legislation, and had many members contact

their representatives to support the legislation.

�Postal Reform: The PresidentialCommission on the Postal Servicewill issue its recommendations onreforming the USPS this summer.Until the commission acts, expect nopostal reform effort to proceed onCapitol Hill. The DMANF filedcomments on behalf of nonprofits toprotect nonprofit postal rates anduniversal service.

�Telemarketing: Now that theFederal Trade Commission has issuedits final rules on a national do-not-call list, with a nonprofit exemptiondue to the efforts of the DMANF, itremains to be seen how the rules willbe implemented. Commercial organ-izations working on behalf of non-profits will be subject to new rules,but will not be subject to the nation-al list. The Direct MarketingAssociation has filed a lawsuit block-ing implementation to protect itscommercial telemarketing members.The Federal CommunicationsCommission is at work on its ownnational do-not-call proposal thisyear. For a flowchart on how the ruleimpacts nonprofits and theirfundraisers, contact the DMANF.

�States: New York State, under theleadership of Attorney General ElliotSpitzer, continues to be one of the

20

Public Policy Scorecard

Issues to Be Addressed in the Coming MonthsSenny Boone, Esq., Executive Director, DMA Nonprofit Federation

least charity-friendly states. Weawait the next version of proposedNew York regulations that set forth a series of new charity accountability measures that will beextremely costly and burdensome to charities that operate in NewYork. The first set of regulationsreceived vehement protests from the nonprofit community and have been revised for a second round of comments. We will keepyou informed. �

Stay tuned to the e-mail bulletin News Update as we strive to keep youinformed and alert to these importantdevelopments. Your help and participa-tion may be needed. If you are not receiving our e-mail alerts, contact Jill Murphy at 202.861.2497, or jmurphy@the-dma.org.

21

For more information on space ad ratesand Connections listings, please call

The DMA Nonprofit Federationat 202.628.4380.

✭ Gain More Exposure ✭

✭ Speak Directly to Your Target Market ✭

✭ Expand Your Business ✭

in the next edition of The DMA Nonprofit Federation Journal

DON’T MISS YOUR OPPORTUNITY TO ADVERTISE

Expanded sections focusing on:Interactive Marketing • Customer Service • B-to-BInternational • Financial Services • AND, new revealinginformation on consumer reaction and response!

PLUS: An Entire Section on NONPROFITS

To Order:Phone: 212.768.7277, Ext.1559Fax: 212.398.6725E-mail: achernis@the-dma.orgVisit our Website: www.the-dma.org/bookstore

Member Price: $150 Non-Member Price: $295

This article originally appeared atwww.guidestar.org and is reprinted with theconsent of the author and GuideStar.

Section 6104(e) of the InternalRevenue Code requires tax-exemptorganizations to disclose certaininformation to the public. Newregulations became effective on June 8,1999. This is a summary of thosedisclosure obligations (and not legaladvice). For more information, youshould consult with a qualified tax orlegal counsel.

Who Must Disclose? —Organizations that are exempt from fed-eral taxation under Internal RevenueCode 501(c) or (d) must disclose certaininformation. (Private foundations shouldabide by existing rules until new regula-tions are issued.) Tax-exempt organiza-tions must disclose this information attheir main office and most regional ordistrict offices where three or moreemployees work.

What Must Be Disclosed? — Tax-exempt organizations must disclosetheir applications for tax exemption(including all supporting attachments,correspondence with the IRS, and finaldetermination letter) — Forms 1023 or1024 — and their last three years’ annualtax/information returns (Form 990 or990-EZ and most attachments).Generally, organizations cannot withholdinformation on employee compensationor other “private” information, but do

not have to disclose information aboutdonors or members or other protected“taxpayer information.” If requested,under rules described below, an organiza-tion must provide copies of the disclosedmaterial, and a request may ask for only a part or section of the application or return.

When Must Applications andReturns Be Made Available for Inspection? — Applications andreturns must be disclosed upon request,in person or in writing. Generally,inspection must be available during nor-mal working hours and at the time of the request.

When Must Copies Be Provided? —Organizations that post their applicationsand returns on the Internet in specifiedways (and inform requesters of theiravailability) do not need to providecopies. There are national clearinghouses(such as GuideStar, www.Guidestar.org)that will publish disclosure informationon the Internet.

Otherwise, if a request is made inperson, an organization must providecopies of disclosable applications andreturns the day they are paid for, except inspecial circumstances (and then withinfive business days). Copies requested inwriting must be provided within 30 daysof advance payment.

An organization may require advancepayment for copies. Payment is limitedto $1 for the first page and $.15 for each

page thereafter (these fees are tied to theIRS’s own cost for copies), plus the actualcost of postage to send the copies.Payment may be accepted in cash,certified check, money order, or eithercredit card, or personal check. If a requestfor copies is received without advancepayment, the organization must send arequest for payment within seven days.Similarly, if the cost for the copies is morethan $20, the organization must receiveconsent from the requester.

There are special rules to protectagainst multiple requests from a“harassment” campaign.

What Are the Penalties for NotDisclosing the Information? — Penalties for failing to permit inspectionor provide copies of applications andreturns apply to both the organizationand its managers (personal liability).Penalties can be as high as $5,000 forwillful failure to allow inspection or provide copies, plus $20 per day up to a maximum of $10,000 per information return (and no limit on failure to disclose applications).

The full text of the disclosureregulations can be found at the Federal Register Web site:http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=1999_register&docid=99-8638-filed. �

Barnaby W. Zall is Counsel with the firm of Weinberg & Jacobs, LLP. He practices tax-exempt organization law, constitutional and statutory litigation(including drafting and defending ballotinitiatives), and commercial law. He israted “AV” by the Martindale-Hubbelllegal rating service — its highest possible rating.

22

Public Inspection of Annual Returnsand ApplicationsBarnaby Zall, Counsel, Weinberg & Jacobs, LLP

In a victory for The DMA, the Federal Trade Commission (FTC)decided to stay the date by which it will require full compliance with the call recording provision of theabandoned call safe harbor§310.4(b)(4)(iii), until October 1, 2003.

The FTC has also partially stayed,until October 1, 2003, the date at whichit will require full compliance with§310.4(b)(4)(iv), to the extent it would

require record keeping to document the use of a recorded message ininstances of call abandonment. Thisaction was taken by the FTC in response to a request by The DMA for a stay on several provisions of theamendments to the Telemarketing Sales Rule.

Nonprofit organizations’telemarketers are not exempt fromthese provisions. �

23

RIGHT NOW!Recent issues addressed in “News Update”

Federal Trade Commission Extends Portionsof Telemarketing Sales Rule Compliance Deadline

Awards PresentationJoin professionals from nonprofit organizations and their service providers to

pay tribute to the person selected to receive the DMA Nonprofit Federation’sNonprofit Achievement Award for 2003 and the 2003 Organization of the Yearaward. The award will be given at the2003 New York NonprofitConference, August 12, at theWaldorf-Astoria in New York City.

Organization of the Year pastwinners include: Easter Seals, Special Olympics, Catholic ReliefServices, Christian AppalachianProject, World Vision and AmericanHeart Association.

Achievement Award winnersinclude: Roger Craver and William A. Begley. �

Coming Soon!The DMA Consumer Affairs &

Ethics department has created aflowchart for nonprofits and thirdparties marketing on their behalf tocomply with the Federal TradeCommission’s newly revisedTelemarketing Sales Rule.

An electronic downloadable versionwill be available on our Web sitewww.nonprofitfederation.org. �

Strategiesfor Fund Raising

with Direct Marketing

TEL 916.683.6807

FAX 916.683.6814

EMAIL info@CMConnolly.com

WEB www.CMConnolly.com

Comprehensive Planning

Creative Development

Target Audience and

List Planning

Implementation and

Production

Analysis and FutureAction Plans

Catherine M. Connolly

Inbound by InfoCision

For more information, contactTodd Grable or Ken Dawson at 330-668-1400or visit our website at www.infocision.com

Good news travels fast. All over the world,

some of the best-known nonprofit organizations are

using Inbound by InfoCision to capitalize on the

highest quality customer service in the industry.

That’s because InfoCision provides its clients with

the attention of a small firm along with the breadth

and depth of experience that comes from working

with the world’s largest, most successful nonprofits.

InfoCision is one of the only inbound service

providers that truly specializes in helping nonprofit

organizations maximize the long-term value of

their donors.

Are you in on the good news? If not, you should be.

Inbound by InfoCision – always the right answer.