Sending Out Campaign Mail at a Discount

An obscure nonprofit group is transforming the way campaign mail is sent to California voters by selling access to its discount mail permit.

By sending campaign brochures through the Policy Issues Institute in Irvine, political consultants save 15% to 20% on mailing costs because of discounts the U.S. Postal Service gives to nonprofits, according to a solicitation sent out by the institute’s paid marketer and political mail guru Bill Butcher. Financial records released by the institute show that those savings were significant enough that consultants paid $2.3 million to the institute for such purposes during last year’s elections.

So far, the institute has been used only by consultants who sell endorsements to political campaigns for tens of thousands of dollars, then flood mailboxes with fliers urging a vote for their candidates or causes. Bearing the title of the institute, millions of these fliers, called slate mailers, reached California voters’ mailboxes in November.

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

Though the practice deprives the Postal Service of hundreds of thousands of dollars in revenue, officials there say it appears to be legal. Scott Jones, manager of business mail for the Santa Ana post office, said that IRS-approved nonprofits whose mailings meet basic standards, such as the 25% content minimum, can do what they want to.

“If they meet these various criteria they can have pretty much any advertising in there,” he said.

Attorney and Dana Point City Councilman James Lacy, who founded the institute in 2001, said the mailings are a means of including policy discussion in campaigns. “We try to elevate the campaign season by injecting some words about a policy issue,” he said.

And “this does enable organizations ... to take advantage of a lower overall cost,” he added. “Doing so is totally consistent with the 1st Amendment, the IRS requirements and U.S. postal regulations.”

The institute sponsored two Orange County City Council debates last year, Lacy said, but its primary purpose is the mailers. Technically, the fliers are newsletters from the nonprofit in which most of the space is turned over to a single advertiser -- a political consultant. The consultant decides who gets the mailer and when it goes out.

Some consultants are troubled by the novel approach. “I’m sure that this policy issues group is following the letter of the law, but I’m sure it’s not the spirit of it,” said Sacramento consultant Natalie Blanning, whose firm publishes a mailer for a group called the Nonpartisan Candidate Evaluation Committee. Her company rejected Butcher’s pitch to send its pieces through the Policy Issues Institute.

Others argue that the innovation could reduce the cost of sending campaign mail enough to tamp down the escalating price of electioneering. “Hopefully this will be the start of a trend where campaigns can get their messages out for less money,” said Bob Stern of the Center for Governmental Studies in Los Angeles. “The post office is already making a bundle of money from political mailing.”

The Democratic and Republican parties -- and, through them, their nominees -- already have access to discount postal rates. The use of nonprofits for slate mail helps level the field for all other political players, some argue.

It’s been profitable for all concerned, except the post office.

Lacy was paid $60,000 by the institute last year, and its marketer, Butcher, received $97,000, according to the financial records. And consultants who work in the burgeoning multimillion-dollar slate mail industry keep more of their fees as they spend less on the mailings.

The obscure slate industry is a lucrative business. Last year, campaigns paid Larry Levine, a Studio City consultant who publishes one of the state’s largest slate mailers, $1.2 million to get into his Voter Information Guide, according to campaign records. Levine’s company kept $306,000 and sent $732,000 to the Policy Issues Institute. The rest went to other costs.

Consultants say the idea of using a nonprofit for political mail has been discussed for years, but no one undertook it until the letter went out last year from Butcher, a pioneer in the direct mail industry who has earned millions of dollars soliciting donations for groups like the Howard Jarvis Taxpayers Assn.

Butcher told consultants that the institute could be used by any type of political campaign and could work with most vendors in the political mail industry. “You will have complete responsibility for providing all the advertising content,” his letter pledged.

Butcher did not return a call for comment.

Allan Hoffenblum, a Republican consultant in Los Angeles who publishes his own slate, said he did not take Butcher up on his mailing offer, fearing voters would be confused by a flier bearing both his name and Policy Issues Institute’s. “I’m not going to put someone else’s name on it to save on postage,” he said.

Other consultants had few compunctions.

“As long ... as the post office allows every nonprofit to sell advertising space, there’s nothing improper about what they’ve done,” said Tim Carey, a South Bay consultant who produces 4 million copies of Your Voter Guide per election, and used the institute to send them at a discount last November.

“Any for-profit business has the ability to work with a nonprofit business to lower the cost of the mail.”

Meanwhile, the institute’s tactics have spawned at least one imitator.

Political consultant Tom Kaptain, who declined to comment for this article, issued his Democratic Voters Choice slate as an advertisement in the newsletter of LA Blazers, a South Los Angeles youth group for which he volunteers. Unlike the Policy Issues Institute, LA Blazers existed for years before renting its newsletter space to a political consultant.

Bennie Davenport, the Blazers’ founder and director, said he cut a deal with Kaptain so his financially struggling group could use the consultant’s mailing list. In return, Kaptain was able to get his information out at nonprofit rates.

“We thrive on trying to get a good mailing list of people who can give to a charity,” Davenport said.