Chapter 17 - § 17.5 • FEDERAL LAWS AFFECTING FUNDRAISING

• Jurisdiction: Colorado

§ 17.5 • FEDERAL LAWS AFFECTING FUNDRAISING

§ 17.5.1—Federal Postal Regulations

In General

A nonprofit organization that uses the U.S. mail system in its solicitations must comply with U.S. Postal Service regulations designed and administered to ensure that mail solicitations are honest. Note that the postal service charges lower mail rates for solicitations from nonprofit organizations.

Postal Regulations on Solicitation

Like state enforcement officials, the U.S. Postal Service is concerned about false, misleading, or deceptive representations in solicitations. Two federal postal statutes — 39 U.S.C. §§ 3001 and 3005 — have implications for the conduct of an organization's fundraising efforts. (Unless otherwise indicated, all references in this chapter to the United States Code (U.S.C.) are current as of January 1, 2018.) In general, those statutes prohibit using the mails to make false representations for obtaining money or property and using the mails to conduct lotteries, games of chance, or drawings. The first statute closely regulates the use of fake bills or pseudo-invoices as a means of soliciting an addressee to order goods or services. 39 U.S.C. § 3001(d). The other provides that the postal service may issue stop orders halting mail service upon evidence that a person

is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations, . . . or is engaged in conducting a lottery, gift enterprise, or scheme for the distribution of money or of real or personal property, by lottery, chance, or drawing of any kind.

39 U.S.C. § 3005(a).

In addition to these statutes, the postal service enforces little-known prohibitions against using the mail to advertise otherwise legal bingo games or raffles that an organization may conduct as part of its fundraising efforts under state-issued permits. Though state law may permit the games, federal law restricts the use of the mail to promote them. See 39 U.S.C. § 3005; 18 U.S.C. § 1302; U.S. Postal Serv., Domestic Mail Manual, § 601.9.3, available at http://pe.usps.com/text/dmm300/601.htm. See also § 17.4.2. This general prohibition contains exceptions for state-run lotteries and state-authorized lotteries run by nonprofit organizations. For instance, the federal statutes appear to permit nonprofit organizations operating a state-authorized lottery to use the mail to convey tickets within the state authorizing the lottery. See 39 U.S.C. § 3005(d)(2)...