United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Social Security, Committee on Ways

and Means, House of Representatives

June 1997 SOCIAL SECURITY

ADVOCACY

Organizations That

Mail Fund-Raising

Letters

GAO/HEHS-97-69

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-276151 

June 18, 1997

The Honorable Jim Bunning

Chairman, Subcommittee on Social

 Security

Committee on Ways and Means

House of Representatives

Dear Mr. Chairman:

The Congress and the media have been concerned that some organizations

conduct fund-raising efforts that may raise elderly people’s fears about

Social Security. Some organizations, for example, have sent letters to

elderly people stating that the Social Security program has “dire financial

troubles” or that its trust funds are being “mishandled” and requesting

financial contributions to combat these alleged threats to the program.

The media have reported that the letters have aroused elderly people’s

fears because they distort problems facing Social Security and exaggerate

threats to Social Security beneficiaries. The media have criticized some

letters for using scare tactics to solicit millions of dollars in donations

from the elderly.

Because some organizations mailing these letters are exempt from federal

income taxes, some individuals may perceive their activities as being

conducted at taxpayer expense. In addition, the general public could view

these organizations’ tax-exempt status as validation for the worthiness of

their fund-raising appeals. This is because an organization’s tax-exempt

status is based on the Internal Revenue Service’s (IRS) recognition of it as a

nonprofit organization promoting the general welfare.

Because of your concerns, you asked us to identify organizations that use

Social Security issues as part of their mail fund-raising appeals.

Specifically, you wanted to know (1) the bases for the groups’ tax

exemption; (2) the services the groups provide; (3) their sources of

income, income subject to taxes, and expenses; (4) their financial

relationships with other businesses; and (5) characteristics of their Social

Security-related fund-raising letters. As agreed with your office, this report

discusses the results of our review of seven organizations that we

identified as using Social Security issues in fund-raising letters. The

organizations we identified are the

• American Conservative Union,

Page 1 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

• Council for Citizens Against Government Waste,

• National Committee to Preserve Social Security and Medicare,

• TREA Senior Citizens League,

• The Seniors Coalition,

• 60/Plus Association, and

• United Seniors Association, Inc. (USA).

Other organizations are also involved in Social Security-related advocacy;

however, they do not rely on mail fund-raisers to the public for support.

For example, the Council of Better Business Bureaus, Inc., reported one

such organization as relying on sales of services and products to members,

commercial activities, or government grants to support its advocacy.

To develop our information, we reviewed the Social Security

Administration’s (SSA) correspondence files to identify organizations that

combine Social Security advocacy with fund-raising letters to the public.

SSA develops these files by encouraging individuals who question Social

Security-related mailings received from businesses to send the agency the

organizations’ solicitation packages. We also obtained information that the

organizations provided either for public record to state regulatory

agencies and a consumer interest group or in response to our inquiries. We

mailed letters in August 1995 and conducted interviews in November 1996

and March 1997, requesting officials of the organizations to provide

information on their organizations’ activities and their views on issues

addressed in this report. We conducted our review between March 1995

and March 1997 following generally accepted government auditing

standards. (See app. I for more details on our objectives, scope, and

methodology.) Appendixes II through VIII detail information on each

organization, including each’s three most recent information returns based

on IRS Forms 990 (if available) and an example of one of its Social

Security-related fund-raising letters.1

Results in Brief The seven organizations we identified that have mailed the public

fund-raising letters alleging threats to Social Security programs are

nonprofit organizations exempt from paying federal income taxes on

income they receive from the public that relates to the public service they

provide. The organizations report providing a variety of public services,

especially education and advocacy on publicly debated issues. For

example, they report educating, lobbying, and testifying as advocates for

the public on issues such as (1) the status of Social Security’s trust funds,

1

IRS Form 990 is a tax-exempt organization’s public annual report on its income and expenses.

Page 2 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

tax increases, and earnings limits; (2) health care; (3) Medicare; (4) foreign

policy; and (5) the federal budget.

The organizations depend on fund-raising letters to generate most of the

income supporting their activities. For tax year 1993, the most recent year

for which comparable data exist, the seven organizations received over 90

percent of their income from public contributions. Their annual

contributions from the public ranged from about $352,000 to $37 million.

They reported to the IRS that 61 to 79 percent of their total spending

supported public service activities and 14 to 37 percent supported fundraising.

Each of the organizations uses a contractor to produce and distribute its

educational materials and to conduct its fund-raising activities. We were

told that hiring professional fund-raising contractors is commonplace in

organizations that solicit contributions to support their activities.

According to officials involved in regulating tax-exempt organizations that

solicit contributions, the organizations are not prohibited from using

fund-raising contractors to manage their educational and fund-raising

activities. Organization officials acknowledged that their fund-raising

letters discuss issues in strong terms but said their letters are intended not

to scare but to educate the public and motivate individuals to action on

certain issues.

Background Some organizations advocate for Social Security issues as part of their

fund-raising appeals. Included among the activities of such organizations

are producing and distributing informational materials to the public and

soliciting contributions from supporters. Some of these informational

materials have included statements about (1) “thefts” by the federal

government from the Social Security trust funds, (2) threats to cost-ofliving adjustments for Social Security benefits, and (3) proposed Social

Security tax increases. These fund-raising letters have sometimes included

surveys and petitions to raise support for these organizations’ positions.

Organizations may be exempt from paying federal income taxes for

varying reasons. The Internal Revenue Code has 25 categories of

organizations—each with its own rules—that qualify for such exemption.2

To qualify, organizations must be nonprofit and organized for one of the

purposes specifically mentioned in the Internal Revenue Code.

2

They may also be exempt from many state and local taxes.

Page 3 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

Bases for

Organizations’

Tax-Exempt Status

IRS exempted six of the organizations we identified under Internal Revenue

Code section 501(c)(4) as social welfare organizations, and it exempted

the other as a qualifying veterans’ organization under section 501(c)(19).3

Section 501(c)(4) allows IRS to exempt nonprofit groups operated and

organized exclusively to promote activities benefiting the common good

and general welfare of a broad community of people. Section

501(c)(19) provides an exemption for nonprofit veterans’ groups that

promote similar activities specific to veterans. Among the seven

organizations, three have had their tax exemption less than 6 years, three

an average of 13 years, and one about 32 years.

Charitable, religious, educational, and scientific organizations, known

collectively as charities, are the best known tax-exempt organizations and

are exempt under section 501(c)(3).4

 The tax provision for social welfare

organizations was intended to grant exemptions to organizations that were

not purely charitable but that served patriotic or community purposes.

Social welfare organizations differ from charities because contributions to

such organizations do not qualify as charitable deductions for federal

income tax purposes. IRS requires social welfare organizations to disclose

in their fund-raising materials that contributions to them do not qualify as

charitable deductions.5

 In addition, before July 30, 1996, the Internal

Revenue Code stipulated nothing about the issue of individuals profiting

financially from social welfare organizations’ activities. Since that time,

the Internal Revenue Code has been amended so that the exemption

allowed under section 501(c)(4) does not apply if any of the organization’s

earnings benefit a private shareholder or individual.6

In their application for tax exemption, the six groups receiving tax

exemptions under section (501)(c)(4) and the one receiving an exemption

under (501)(c)(19) proposed advocating for the public interest by trying to

3

Social Security-related fund-raising letters were previously mailed by the TREA Senior Citizens

League, part of The Retired Enlisted Association, before the Senior Citizens League received its own

501(c)(4) tax exemption.

4

An organization may have exemptions from federal income taxes under more than one section of the

Internal Revenue Code such as in cases when the organization establishes separate units that also

qualify for tax exemptions.

5

We found the organizations’ mailings generally include response devices such as surveys and petitions

in which the organizations usually discuss the nondeductibility of contributions to them for federal

income tax purposes. Contributions to an organization exempt under section 501(c)(19) of the Internal

Revenue Code may qualify as charitable deductions for federal income tax purposes if 90 percent or

more of the organization’s members are war veterans.

6

P.L. 104-168.

Page 4 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

influence legislation by contacting legislators or the general public. In

requesting federal income tax exemption from IRS, the seven organizations

essentially described their main purpose as educating the public about

relevant issues and increasing its participation in the political arena.

Organizations

Emphasize Advocacy

Work

All seven organizations said that they rely on fund-raising letters to finance

their educational and advocacy work. They had from 80,000 to 6 million

senior citizens, retired military personnel, and members of the general

public among their members and supporters, we were told.7

Officials of the organizations we spoke with said their organizations are

issue oriented rather than service oriented. That is, sales of services and

merchandise to members constitute a small portion of their income.

Officials said they educate and advocate for members and target audiences

on a range of issues—including the Social Security program. Issues other

than Social Security include foreign policy, welfare reform, Medicare,

health care, the consumer price index, and federal spending. In addition to

mass mailing fund-raising letters, these organizations send newsletters to

members and distribute a variety of free, issue-oriented informational

literature to members of the Congress, the media, and interested groups.

As examples, the organizations cited publications that rated individual

Congress members, another containing questions most asked about Social

Security benefits, and one detailing basic information about becoming a

senior activist. Radio public service announcements; television programs

featuring seniors’ issues; a toll-free telephone line for members to obtain

information on relevant issues; and ancillary services, such as discounts

on prescription drugs, eyeglasses, and travel discounts are offered by a

few of these organizations.

The organizations also reported conducting activities to influence

legislation such as lobbying and testifying before the Congress. Examples

of these activities include (1) sponsoring a conference to discuss and set

political agendas for publicly debated issues; (2) lobbying for the repeal of

the Social Security tax increase and earnings limit; and (3) testifying on

issues such as health care, the federal budget, and telemarketing of

seniors. Officials said the organizations often attach surveys and petitions

to their fund-raising letters to raise support for certain positions. They

reported communicating supporters’ responses to surveys and petitions to

the Congress or the President and sometimes urging supporters to

7

Some of the organizations defined members as individuals who made recent contributions and

supporters as individuals who answered surveys or signed petitions.

Page 5 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

communicate directly with elected officials. Most indicated that they also

participate in or conduct town meetings and workshops on issues of

interest to their targeted groups. We verified neither each organization’s

performance of the reported activities nor these activities’ frequency.

Income and Expenses The seven organizations receive their income mainly from public

contributions and to a lesser extent from commercial activities. Income

they receive from commercial activities is taxed if those activities do not

substantially relate to the basis for their tax exemption. For example,

income from magazine sales may or may not be taxable depending on the

facts and circumstances of each case, which determine whether the

activity substantially relates to the organization’s tax exemption.

A review of the organizations’ annual information returns revealed that all

rely on public contributions as their main source of income. The

organizations use fund-raising letters to generate contributions. For 1993,

the most recent year for which comparable information was available,

contributions from the public constituted at least 92 percent of each

organization’s total income. For the seven organizations, the amounts they

received from the public ranged from about $352,000 to $37 million. Six of

them reported total tax-exempt income from commercial activities—

interest on investments, insurance income, sales of mailing lists,

advertising revenue, and convention sales—ranging from $11,000 to

$527,000. Three of the six reported taxable commercial income (not

substantially related to their tax-exempt purposes) of $7,000, $241,000, and

$2 million, respectively. (See table 1 for amounts reported by each

organization.)

Page 6 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

Table 1: Organizations That Mail Social Security-Related Fund-Raising Letters to the Public, Tax Year 1993 Financial Profile

Dollars in thousands

American

Conservative

Union

Council for

Citizens

Against

Government

Waste

National

Committee to

Preserve Social

Security and

Medicare

TREA

Senior

Citizens

League

The

Seniors

Coalition

60/Plus

Associationa USA

Income from

General public $9,395 $2,926 $37,443 $4,161 $11,114 $352 $4,830

Taxable

commercial

activities 0 0 1,988 7 241 0 0

Tax-exempt

commercial

activities 89 11 527 333 70 0 285

Total income $9,484 $2,937 $39,958 $4,501 $11,425 $352 $5,115

Expenses for

Public service

activities 6,491 2,139 23,600 2,731 7,548 494 2,721

Fund-raising

activities 2,239 490 7,467 1,079 1,364 165 2,182

Administrative

activities 1,610 252 7,666 262 599 13 966

Total expenses $10,340 $2,881 $38,733 $4,072 $9,511 $672 $5,869

a60/Plus Association reported a $321,000 deficit.

Source: IRS Form 990, “Return of Organization Exempt From Income Tax.”

The seven organizations’ total expenses for tax year 1993 ranged from

about $673,000 to about $39 million. Their reported expenses for public

service activities ranged from about 46 to 79 percent of their total

expenses. Expenses for fund-raising activities ranged from 14 to

37 percent, and those for administrative activities ranged from 2 to

20 percent of their total expenses. (See apps. II through VIII for a summary

of each organization’s three most recent information returns.)

The organizations routinely incurred certain expenses to conduct their

educational and fund-raising programs, according to a review of the IRS

Forms 990. They reported incurring expenses for (1) production and

printing of informational materials, (2) postage and shipping to distribute

materials to the public, (3) mailing lists and membership development to

Page 7 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

gain contributors and supporters, and (4) computer services to support

these functions.

Relationships With

Other Businesses

All seven organizations use contractors to conduct educational and

fund-raising programs. Officials told us in March 1997 that, because these

organizations depend heavily on public contributions, using experienced

fund-raisers is the most cost-effective way of managing their resources.

They said the cost of handling the large but infrequent workload of mailing

fund-raising letters in house would be prohibitive. Because professional

fund-raising contractors routinely handle large-volume mailings, however,

they can readily provide services necessary to market and produce mass

mailings at reduced costs. Moreover, these contractors serve as strategic

advisors to increase the effectiveness of the organizations’ mailings. The

contractors may recommend specific mail projects and schedules and

sometimes provide services to conduct mail campaigns or obtain the

services through other vendors. In the latter situation, when the contractor

arranges for other vendors to provide services, their contracts with the

nonprofit organizations require the vendors to be paid directly by the

nonprofit organizations.

The organizations develop and research the issues for their fund-raising

letters, officials told us, and fund-raising contractors do the creative

writing (subject to the organizations’ approval) and find vendors to

produce and mail letters. In addition, the organizations retain approval

authority, officials said, over services provided or obtained on their behalf

by fund-raising contractors. Using professional fund-raisers to handle this

aspect of organization work allows more time for education and advocacy

activities, according to officials.

From the records we examined, we could neither determine how much the

seven nonprofit organizations paid contractors to conduct their education

and fund-raising programs nor how much they paid other vendors chosen

by their fund-raising contractors. For six of the organizations, according to

our review of IRS Forms 990, about 59 to 92 percent of their spending was

for producing materials for mailing, delivering materials, increasing

membership, and hiring computer services. These same services were

specified in contracts with the six organizations’ fund-raising contractors.8

8

USA told us it did not use a fund-raising contractor for tax year 1993 but conducted its fund-raising

programs in house. The organization said 1994 was the first year it used a professional fund-raising

contractor.

Page 8 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

Fund-Raising Letters

Make Emotional

Appeals for Support

Each of the seven organizations we reviewed conducted mail campaigns

that combined education and fund-raising activities. (See apps. II through

VIII for examples of letters used in these campaigns.) We found examples

of letters describing money in the Social Security trust funds as having

been “borrowed” or “looted” by the Congress “to spend on wasteful

programs.” Other letters informed individuals that they will not receive the

benefits to which they are entitled because the Congress and President

“would rather tax Social Security benefits than stop their wasteful

spending” or because they are considering “anti-senior proposals” that

would reduce the amount of individuals’ Social Security benefits.

Members of the public wrote to SSA expressing concern about receiving

such Social Security-related fund-raising letters. SSA responded by

informing them that they do not have to contribute to the organizations to

continue receiving Social Security benefits and expressed concern that the

mailings undermine the public’s confidence in Social Security. In

publications that SSA provides the public, the agency has cautioned about

organizations that solicit contributions to “save” Social Security from

serious financial trouble or to support the organizations’ efforts to combat

alleged “mishandling” of the trust funds. One SSA publication reported that

some letters deliberately mislead individuals into thinking they must

respond with a donation or risk losing their Social Security benefits.

Officials of the organizations do not believe their Social Security-related

fund-raising letters scare the public, they told us, but that the type of

issues their letters raise is the source of the public’s concern. Their letters

educate the public about issues, such as the funding of Social Security

benefits and the government’s use of Social Security money, they said,

which are not fully understood by the public. It is more harmful to

members of the public to be uninformed and not act to influence

legislation affecting them, according to these officials.

Comments and Our

Evaluation

The Commissioner of SSA and each of the seven organizations responded

to our request for comments on a draft of this report, and they took no

exception to its contents. One of the organizations offered technical

comments, which we incorporated in the report. Appendix IX includes

letters from SSA and the six organizations that provided such letters,

commenting on our draft report.

Page 9 GAO/HEHS-97-69 Fund-Raising Letters
B-276151 

We are sending copies of this report to the Commissioner of SSA, the seven

organizations we reviewed, and other interested parties. Copies will also

be made available to others upon request.

If you or your staff have any questions about this report, please call me on

(202) 512-7215. Appendix X lists major contributors to this report.

Sincerely yours,

Jane Ross

Director, Income Security Issues

Page 10 GAO/HEHS-97-69 Fund-Raising Letters
Page 11 GAO/HEHS-97-69 Fund-Raising Letters
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

16

Appendix II 

American

Conservative Union

19

Appendix III 

Council for Citizens

Against Government

Waste

27

Appendix IV 

National Committee

to Preserve Social

Security and Medicare

33

Appendix V 

TREA Senior Citizens

League

40

Appendix VI 

The Seniors Coalition

45

Appendix VII 

60/Plus Association

55

Page 12 GAO/HEHS-97-69 Fund-Raising Letters
Contents

Appendix VIII 

United Seniors

Association

64

Appendix IX 

Comments From the

Social Security

Administration and

Six Organizations

71

Appendix X 

Major Contributors to

This Report

81

Tables Table 1: Organizations That Mail Social Security-Related

Fund-Raising Letters to the Public, Tax Year 1993 Financial

Profile

7

Table II.1: ACU’s Financial Profile 21

Table III.1: CCAGW’s Financial Profile 28

Table IV.1: National Committee to Preserve Social Security and

Medicare’s Financial Profile

34

Table V.1: TREA’s and TREA Senior Citizens League’s Financial

Profile

42

Table VI.1: The Seniors Coalition’s Financial Profile 47

Table VII.1: 60/Plus Association’s Financial Profile 56

Table VIII.1: USA’s Financial Profile 65

Figures Figure II.1: ACU Fund-Raising Letter 23

Figure III.1: CCAGW Fund-Raising Letter 30

Figure IV.1: National Committee to Preserve Social Security and

Medicare Fund-Raising Letter

36

Figure V.1: TREA Fund-Raising Letter 44

Figure VI.1: The Seniors Coalition Fund-Raising Letter 49

Figure VII.1: 60/Plus Association Fund-Raising Letter 58

Figure VIII.1: USA Fund-Raising Letter 67

Page 13 GAO/HEHS-97-69 Fund-Raising Letters
Contents

Abbreviations

ACU American Conservative Union

CCAGW Council for Citizens Against Government Waste

IRS Internal Revenue Service

SSA Social Security Administration

TREA The Retired Enlisted Association

USA United Seniors Association, Inc.

Page 14 GAO/HEHS-97-69 Fund-Raising Letters
Page 15 GAO/HEHS-97-69 Fund-Raising Letters
Appendix I 

Objectives, Scope, and Methodology

Although we identified other organizations known for their Social Security

advocacy, we focused on tax-exempt organizations combining fund-raising

with Social Security advocacy in letters to the general public for our

review. To do this, we initially reviewed files of SSA’s Office of Public

Affairs to identify organizations that had sent Social Security-related

fund-raising letters to the public. Next, we determined whether these

organizations recently filed annual information returns (IRS Forms 990) as

required by IRS for currently operating organizations. Through this process,

we identified 10 organizations, only 7 of which were currently operating

and had fund-raising letters in SSA’s files.

The organizations we identified are the (1) American Conservative Union,

(2) Council for Citizens Against Government Waste, (3) National

Committee to Preserve Social Security and Medicare, (4) TREA Senior

Citizens League, (5) The Seniors Coalition, (6) 60/Plus Association, and

(7) United Seniors Association. Our objectives were to provide

information about each organization on (1) the basis for its tax exemption;

(2) the services it provides the public; (3) its income, income subject to

taxes, and expenses; (4) its financial relationships with other businesses;

and (5) characteristics of its Social Security-related fund-raising letters. In

literature provided to the public, SSA encourages individuals who question

Social Security-related mailings received from businesses to mail SSA the

entire solicitation package along with their written inquiry. For example,

members of the public have written to SSA asking whether they must send

money to certain organizations to protect their Social Security benefits

and have enclosed the solicitation packages that prompted them to

contact SSA.

Appendixes II though VIII include examples of Social Security-related

fund-raising letters we found for each organization. These letters do not

constitute the organizations’ complete solicitation packages and may not

fully represent all the mailings they have sent to the public.

In addition, we conducted literature searches and interviewed cognizant

officials to discuss their knowledge of organizations that send Social

Security-related mailings. We interviewed officials from SSA’s Office of

Public Affairs and Office of Inspector General; IRS; the Council of Better

Business Bureaus, Inc.; selected state regulatory agencies; and consumer

interest groups. We also discussed ethical business practices with the

National Charities Information Bureau and Direct Marketing Association.

Page 16 GAO/HEHS-97-69 Fund-Raising Letters
Appendix I 

Objectives, Scope, and Methodology

We determined the bases for the organizations’ tax-exempt status by

reviewing their application for tax exemption (IRS Form 1024, “Application

for Recognition of Exemption”), IRS determination letters, the Internal

Revenue Code, and IRS reporting instructions.

In a certified letter to each of the seven organizations sent in August 1995,

we asked them to provide information about their operations and services

they provide the public. All organizations except 60/Plus Association

responded to our letter. In November 1996 and March 1997, we

interviewed officials from each organization to obtain their views on

issues addressed in our report and on their Social Security-related fundraising activities.

We profiled the organizations’ income and expenses by reviewing IRS

reporting instructions and analyzing the organizations’ three most recent

information returns, which they provided or which were on file with the

states where we conducted our field work.9

 Generally, IRS requires

tax-exempt organizations to file an IRS Form 990, “Return of Organization

Exempt From Income Tax,” for public inspection.10 IRS Form 990 shows

expenses incurred by tax-exempt organizations for various types of

services. It also shows organizations’ allocation of expenses for services

on the basis of the function the services support. The functions include the

(1) public service activities for which the organization was created and

received its tax exemption, (2) fund-raising activities to solicit and handle

contributions received from the public, and (3) centralized administrative

activities (that is, board meetings and general legal services) not directly

related to either of the other two functions.

We could not determine the possible financial relationships among the

seven organizations, their fund-raising contractors, and other businesses.

We reviewed copies of the organizations’ contracts with their fund-raising

contractors on file with state regulatory agencies. We also reviewed

information that the National Committee to Preserve Social Security and

Medicare, TREA Senior Citizens League, The Seniors Coalition, and United

Seniors Association provided in response to an inquiry by the

Pennsylvania State Attorney’s Office. The Pennsylvania State Attorney’s

Office had requested organizations actively soliciting in the state to

provide it with information on the type of businesses with which the

organizations had contracts and an itemization of organizations’ payments

9

IRS requires tax-exempt organizations to file a Form 990 within 5 months and 15 days of the close of

their fiscal year. Some states accept a copy of IRS Form 990 to satisfy state reporting requirements.

10Generally, annual reports are required for tax-exempt organizations with gross incomes over $25,000.

Page 17 GAO/HEHS-97-69 Fund-Raising Letters
Appendix I 

Objectives, Scope, and Methodology

to vendors. Upon reviewing the above information, we determined that we

needed certain internal records of the organizations to determine the

amounts they had paid to fund-raising contractors and the amounts paid to

other vendors for services arranged by fund-raising contractors.

We developed information on the organizations’ relationships with other

businesses by reviewing their contracts with fund-raising contractors

corresponding to the periods covered by the organizations’ information

returns. We identified the services that fund-raising contractors managed

or provided for the organizations. We reviewed the organizations’

information returns to determine the amounts they reported spending for

services mentioned in contracts with their fund-raising contractors.

Information in this report was provided by these organizations for public

record to state regulatory agencies, to consumer interest groups, or in

response to our inquiries. We did not verify the accuracy of the

information provided. We performed our work at SSA headquarters in

Baltimore, Maryland; the IRS Southeast Key District Office, Exempt

Organization Branch; state offices in Maryland, Pennsylvania, and Virginia;

and offices of the seven organizations located in Washington, D.C., and

Virginia. We chose the state regulatory agencies because of their proximity

to our work location. We conducted our review between March 1995 and

March 1997 following generally accepted government auditing standards.

Page 18 GAO/HEHS-97-69 Fund-Raising Letters
Appendix II 

American Conservative Union

The American Conservative Union (ACU), founded in December 1964,

received an exemption from federal income taxes as a social welfare

organization under section 501(c)(4) from IRS on April 1, 1977. In 1995, ACU

reported its membership to be about 800,000 members and supporters. ACU

advances the principles of American conservatism, using public education

and direct political action, according to an ACU official. The organization

uses mailings to correspond with members and prospective members. The

mailings do not specifically target seniors but people of all ages, said an

official.

ACU is a multi-issue organization, said this official, and Social Security

issues have not been its major focus. Some of the issues ACU has addressed

in its mailings include the Social Security trust funds, health care reform,

Medicare, Social Security tax increases, defense and foreign policy, and

federal spending. In one of its Social Security-related mailings, ACU asked

individuals to help it get the “Congress’ greedy hands out of the Social

Security Trust Funds.” ACU’s letter alleged that the Congress borrowed

money from the Social Security trust funds and spent it on wasteful

programs. The letter requested financial contributions to support ACU’s

efforts to prevent future borrowing from the Social Security trust funds. It

also asked for signatures for a petition to support legislation to restrict the

Congress’ use of the Social Security trust funds. (See fig. II.1 at the end of

this app. for a copy of the letter.)

Advocacy Activities ACU does not provide members services in the customary sense but

advocates for members through its educational and direct lobbying

activities, according to the official. ACU provides members its newsletter,

Battleline, which covers ACU’s activities and developments in the Congress.

ACU distributes a variety of free literature at events such as conferences.

The organization provided us a copy of ACU’s publication rating individual

members of the Congress on the basis of the members’ votes on a range of

issues. ACU said it provides these ratings to news media, advocacy groups,

and the public.

ACU uses direct mail “to inform, educate, and alert the public” about

particular issues, the ACU official said, and the mailings usually request

financial support and include petitions or surveys. Some of the mailings do

not seek financial help, however, but instead request individuals to take

certain actions such as writing or calling members of the Congress. ACU

compiles survey responses received from individuals and reports the

results in its newsletter, in subsequent mailings to the public, and in press

Page 19 GAO/HEHS-97-69 Fund-Raising Letters
Appendix II 

American Conservative Union

releases, the official said. ACU usually presents the petitions to the

Congress.

ACU provides a variety of political advocacy services. For example, ACU has

testified before the Congress and also encourages its members to make

their views known to the Congress. ACU annually sponsors the

Conservative Political Action Conference, during which conservative

activists and leaders discuss current issues and set future political

agendas.

Income and Expenses For tax years 1991 through 1993, ACU received from $822,000 to

$9.4 million annually (over 95 percent of its income) from the public. (See

table II.1 for ACU’s financial profile based on IRS Form 990.) ACU reported

receiving income ranging from $11,000 to $89,000 from use of its mailing

list. It reported that all of this commercial income supported tax-exempt

activities and thus, under IRS rules, was not subject to federal income

taxes.

Page 20 GAO/HEHS-97-69 Fund-Raising Letters
Appendix II 

American Conservative Union

Table II.1: ACU’s Financial Profile

1993 1992 1991

Dollars in thousands

Amount Percent Amount Percent Amount Percent

Income from

General public $9,395 99.1 $948 95.5 $822 98.7

Taxable commercial

activities 0 0.0 0 0.0 0 0.0

Tax-exempt commercial

activities 89 0.9 45 4.5 11 1.3

Total income $9,484 100.0 $993 100.0 $833 100.0

Expenses by function

Public service activities 6,491 62.8 473 49.0 81 8.9

Fund-raising activities 2,239 21.7 303 31.4 764 83.5

Administrative activities 1,610 15.6 190 19.7 70 7.7

Total expenses $10,340 100.0 $966 100.0 $915 100.0

Expenses by services

Postage/shipping 5,343 51.7 342 35.4 309 33.8

Printing/publication 1,579 15.3 130 13.5 199 21.7

Mail list related 1,729 16.7 100 10.4 172 18.8

Computer 381 3.7

Subtotal $9,032 87.4 $572 59.2 $680 74.3

Other services 1,308 12.6 394 40.8 235 25.7

Total expenses $10,340 100.0 $966 100.0 $915 100.0

Note: Percents may not add to 100 due to rounding.

Source: GAO summary of reporting on IRS Form 990.

An ACU official attributed the increase in ACU’s contributions from the

public between tax years 1991 to 1993 to the start-up of health care reform

initiatives by President Clinton. At the start of health care reform, ACU

substantially increased mailings to gain members and solicit contributions,

said the official. He believed the increase in contributions from the public

reflected a growing support for conservative groups such as ACU.

ACU’s expenses for tax years 1991 through 1993 ranged from about

$915,000 to $10 million. During this period, its expenses for public service

activities increased from 8.9 percent of its total expenses to 62.8 percent.

In the years following health care reform, the official said, ACU directed

more of its spending to public service activities and less toward

Page 21 GAO/HEHS-97-69 Fund-Raising Letters
Appendix II 

American Conservative Union

fund-raising. ACU reported that its spending for fund-raising activities

decreased from 83.5 to 21.7 percent of its total expenses during this

period.

Relationships With

Other Businesses

Registration documents revealed that ACU had hired two fund-raising

contractors. An ACU official confirmed that the organization had contracts

with both of the fund-raising contractors during the period covered by

ACU’s 1991 through 1993 information returns. One contractor provided

strategic planning and scheduling for ACU’s fund-raising program. It

oversaw all aspects of ACU’s fund-raising program, including writing copy,

selecting mailing lists and vendors for cashier services, and determining

the quantity of mailings. The contract authorized the contractor to accept

bids from other business on behalf of ACU for services to conduct fundraising. ACU paid vendors for the services its contractor obtained on its

behalf. The other contractor conducted an education as well as a

fund-raising program for ACU. The latter contractor either performed

services or subcontracted with other businesses on ACU’s behalf to obtain

services to conduct these programs. The latter contractor secured

computer services; procured mailing lists; and printed, produced, and

mailed literature. A review of ACU’s information returns for tax years 1991

through 1993 shows that 59.2 to 87.4 percent of ACU’s total expenses were

for services also specified in contracts with its contractors.

Page 22 GAO/HEHS-97-69 Fund-Raising Letters
Appendix II 

American Conservative Union

Figure II.1: ACU Fund-Raising Letter

Page 23 GAO/HEHS-97-69 Fund-Raising Letters
Appendix II 

American Conservative Union

Page 24 GAO/HEHS-97-69 Fund-Raising Letters
Appendix II 

American Conservative Union

Page 25 GAO/HEHS-97-69 Fund-Raising Letters
Appendix II 

American Conservative Union

Page 26 GAO/HEHS-97-69 Fund-Raising Letters
Appendix III 

Council for Citizens Against Government

Waste

The Council for Citizens Against Government Waste (CCAGW), founded in

September 1984,11 received exemption as a social welfare organization

from federal income taxes under section 501(c)(4) from IRS on

December 21, 1984. CCAGW describes itself as providing its members and

the general public with educational materials about what it perceives as

government waste. In 1995, CCAGW had about 600,000 members, according

to an official.

Of its 16 mailings in 1993 and 1994, a CCAGW official said, only two

discussed Social Security issues. One advocated eight specific

governmentwide spending cuts instead of higher Social Security taxes, and

the other suggested that individuals inform their representatives if they

opposed recent tax increases on Social Security benefits.

CCAGW’s mailing about the Social Security tax increase asked current

Social Security beneficiaries whether they were “mad as hell that [their]

Social Security benefits [they] paid for during [their] working career are

now being taxed away.” It asked workers “if the new taxes made [them]

doubt that [they’ll] ever see a penny of the Social Security benefits [they]

are now paying for.” The letter said that the Congress and President

should stop taxing Social Security benefits and instead be forced to cut

wasteful spending. It urged individuals to support CCAGW’s efforts to

protect current and future Social Security benefits by contributing to

CCAGW and supporting its petition to repeal the 1993 Social Security tax

increase. (See fig. III.1 at the end of this app. for a copy of the letter.)

Advocacy Activities CCAGW mails members a wide variety of literature about government waste,

including a quarterly newsletter. CCAGW has not surveyed its members

about Social Security-related issues, according to the official.

CCAGW lobbies the Congress on its members’ behalf. On occasion, the

official said, CCAGW asks members to send letters to their congressional

representatives to oppose specific congressional actions. In 1995, CCAGW

joined the Coalition for America’s Future, which lobbied for the repeal of

the 1993 Social Security tax increase and an increase in the earnings limit

for Social Security beneficiaries, among other activities.

Income and Expenses From tax years 1992 through 1994, CCAGW received from $2.3 million to

$2.9 million a year (over 99 percent of its income) from the public. (See

11Before Sept. 1985, CCAGW was called Council for Citizens Against Waste.

Page 27 GAO/HEHS-97-69 Fund-Raising Letters
Appendix III 

Council for Citizens Against Government

Waste

table III.1 for CCAGW’s financial profile based on IRS Form 990.) During this

period, CCAGW received from $4,000 to $11,000 a year in income from

interest, royalties, and sales of items at conferences. CCAGW reported all of

the income from these activities as mission related and therefore exempt

from federal income taxes.

Table III.1: CCAGW’s Financial Profile

1994 1993 1992

Dollars in thousands

Amount Percent Amount Percent Amount Percent

Income from

General public $2,305 99.6 $2,926 99.6 $2,613 99.8

Taxable commercial

activities 0 0.0 0 0.0 0 0.0

Tax-exempt commercial

activities 9 0.4 11 0.4 4 0.2

Total income $2,314 100.0 $2,937 100.0 $2,617 100.0

Expenses by function

Public service activities 1,770 76.6 2,139 74.2 1,985 76.0

Fund-raising activities 396 17.1 490 17.0 446 17.1

Administrative activities 144 6.2 252 8.7 182 7.0

Total expenses $2,310 100.0 $2,881 100.0 $2,613 100.0

Expenses by services

Postage/shipping 12 0.5 17 0.6 16 0.6

Printing/publication 178 7.7 282 9.8 221 8.5

Membership related 1,474 63.8 1,836 63.7 1,599 61.2

Subtotal $1,664 72.0 $2,135 74.1 $1,836 70.3

Other services 646 28.0 746 25.9 777 29.7

Total expenses $2,310 100.0 $2,881 100.0 $2,613 100.0

Note: Percents may not add to 100 due to rounding.

Source: GAO summary of reporting on IRS Form 990.

CCAGW’s expenses for the 3 years have been between $2.3 million and

$2.9 million. Its expenses for public service activities have generally been

around 75 percent of its total spending, with fund-raising expenses

accounting for less than 9 percent of its total spending.

Page 28 GAO/HEHS-97-69 Fund-Raising Letters
Appendix III 

Council for Citizens Against Government

Waste

Relationships With

Other Businesses

CCAGW used a contractor to conduct its fund-raising program. CCAGW’s

contract with the fund-raising contractor that we reviewed covered from

April 1, 1994, through March 31, 1997. The contract required the

fund-raising contractor to recommend specific mail projects and

schedules. In addition, the contract stated that the fund-raising contractor

would procure mailing list(s) of prospective donors from other businesses

and could also contract with other vendors for services such as creating,

producing, and mailing materials. The contract stated that CCAGW would

pay vendors for services the contractor arranged on its behalf. CCAGW used

the same contractor during the years covered by its 1992 through 1994

financial reports, according to an official. The fund-raising contractor

essentially performed the same services during the earlier period. For tax

years 1992 through 1994, CCAGW’s expenses for services mentioned in the

contract with its fund-raising contractor accounted for 70 to 74 percent of

CCAGW’s total spending.

Page 29 GAO/HEHS-97-69 Fund-Raising Letters
Appendix III 

Council for Citizens Against Government

Waste

Figure III.1: CCAGW Fund-Raising Letter

Page 30 GAO/HEHS-97-69 Fund-Raising Letters
Appendix III 

Council for Citizens Against Government

Waste

Page 31 GAO/HEHS-97-69 Fund-Raising Letters
Appendix III 

Council for Citizens Against Government

Waste

Page 32 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IV 

National Committee to Preserve Social

Security and Medicare

The National Committee to Preserve Social Security and Medicare,

incorporated on November 18, 1982, received exemption as a social

welfare organization from federal income taxes under section

501(c)(4) from IRS on February 22, 1983. As part of its mission, the

Committee has stated that it will support the continuation of the Social

Security and Medicare programs and work to maintain the integrity of the

Social Security trust funds for all Americans.

The Committee uses mailings to conduct its education and advocacy

activities. In 1995, the organization had about six million members and

supporters. About once a month, according to an official, the organization

sends members and prospective members a mailing that discusses an issue

before the Congress that affects Social Security or Medicare. The mailing

usually requests contributions and includes a survey or petition.

In one of its mailings to the public, the Committee informed individuals

that the Congress was supporting a proposal that threatened future Social

Security benefits. The Committee’s letter told individuals that the

Congress’ “anti-senior proposals would reduce the amount of [their]

annual Social Security Cost-of-Living-Adjustment.” The Committee

reminded people of its success in opposing other cuts in Social Security

benefits and asked for their support once again. The letter requested

support for an enclosed petition and a financial contribution to the

organization. (See fig. IV.1 at the end of this app. for a copy of the letter.)

Advocacy Activities The Committee reports using a variety of means to communicate issues

concerning senior citizens to its members, the public, and those in the

field of aging; some of these means involve no fund-raising. As examples,

an official cited the Committee’s bimonthly magazine, Secure Retirement,

its responses to the public’s written and telephone inquiries, legislative

alerts on pending issues, opinion editorials published in newspapers

nationwide, and radio public service announcements. The Committee

reports maintaining a toll-free information hot line to keep members

abreast of congressional developments and providing members discounts

for services such as medical prescriptions, eyeglasses, and hearing aids.

Among its advocacy activities, the Committee lobbies and testifies before

the Congress, surveys the public to formulate legislative positions, and

encourages members to communicate views to the Congress. The

organization reported in 1994 that it testified 10 times on a variety of

issues, including health care reform, Medicare reform, and the federal

Page 33 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IV 

National Committee to Preserve Social

Security and Medicare

budget. The Committee said it also holds town hall-style meetings with

seniors about issues of interest to them and conducts outreach and

information sharing on entitlement programs such as the Supplemental

Security Income program.

Income and Expenses For tax years 1992 through 1994, the Committee received $34.2 million to

$37.4 million annually (around 93 percent of its income) from the public.

(See table IV.1 for the Committee’s financial profile based on IRS Form

990.) It received income of $2.3 million to $2.6 million from interest and

magazine sales. It reported that all of its income from magazine sales,

ranging from $1.5 million to $2.2 million, was unrelated to its tax-exempt

mission and therefore subject to federal income taxes.

Table IV.1: National Committee to Preserve Social Security and Medicare’s Financial Profile

1994 1993 1992

Dollars in thousands

Amount Percent Amount Percent Amount Percent

Income from

General public $36,293 93.4 $37,443 93.7 $34,159 93.7

Taxable commercial

activities 2,241 5.8 1,988 5.0 1,549 4.2

Tax-exempt commercial

activities 322 0.8 527 1.3 766 2.1

Total income $38,856 100.0 $39,958 100.0 $36,474 100.0

Expenses by function

Public service activities 24,225 59.3 23,600 60.9 18,053 53.1

Fund-raising activities 7,849 19.2 7,467 19.3 9,246 27.2

Administrative activities 8,808 21.5 7,666 19.8 6,722 19.8

Total expenses $40,882 100.0 $38,733 100.0 $34,021 100.0

Expenses by services

Postage/shipping 6,908 16.9 6,284 16.2 4,968 14.6

Printing/publication 17,583 43.0 17,622 45.5 14,692 43.2

Mail list related 1,021 2.5 954 2.5 1,082 3.2

Computer 2,407 5.9 1,193 3.1 1,131 3.3

Subtotal $27,919 68.3 $26,053 67.3 $21,873 64.3

Other services 12,963 31.7 12,680 32.7 12,148 35.7

Total expenses $40,882 100.0 $38,733 100.0 $34,021 100.0

Note: Percents may not add to 100 due to rounding.

Source: GAO summary of reporting on IRS Form 990.

Page 34 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IV 

National Committee to Preserve Social

Security and Medicare

The Committee’s expenses for the 3 years have ranged from $34.0 million

to $40.9 million. During this period, it reported that from 53 to 61 percent

of its total expenses were for public service activities. The organization

reported that fund-raising expenses accounted for 27 percent of its total

spending for the first year and 19 percent for the last 2 years covered by its

1992 through 1994 information returns.

Relationships With

Other Businesses

The Committee used a fund-raising contractor to conduct its direct mail

educational and fund-raising programs. A Committee official confirmed

that the organization had a contract with the fund-raising contractor in

effect during the tax years covered by its 1992 through 1994 information

returns. A review of the contract revealed that the fund-raising contractor

oversaw such functions as printing and producing materials; mail listrelated services; and computer, mailing, and postage services. The

contractor either provided the services or arranged for the Committee to

receive the services from other vendors. The Committee retained control

over all its fund-raising activities, including timing, frequency, nature, and

content of mailings, according to an official. It also had contracts with

other vendors, we found, for cashier operations, data processing,

publication of its magazine, investment management, list management and

brokerage, prescription drug services, office supplies, artwork, and

various consulting services. Expenses for the services mentioned in the

Committee’s contract with the contractor that conducted its educational

and fund-raising programs accounted for about two-thirds of the

Committee’s total spending during the 3-year period.

Page 35 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IV 

National Committee to Preserve Social

Security and Medicare

Figure IV.1: National Committee to Preserve Social Security and Medicare Fund-Raising Letter

Page 36 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IV 

National Committee to Preserve Social

Security and Medicare

Page 37 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IV 

National Committee to Preserve Social

Security and Medicare

Page 38 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IV 

National Committee to Preserve Social

Security and Medicare

Page 39 GAO/HEHS-97-69 Fund-Raising Letters
Appendix V 

TREA Senior Citizens League

TREA Senior Citizens League was established in 1993 as a special project of

The Retired Enlisted Association (TREA). TREA, founded in 1963, received

its current exemption from federal income taxes as a qualifying veterans’

organization under section 501(c)(19) from IRS on June 29, 1984. TREA is a

federally chartered veterans’ organization that provides services to retired

military personnel. TREA considers its target audience to be military

personnel retired either due to a medical disability or to longevity of

service.

According to a League official, the League became an independent affiliate

of TREA in January 1995 and received an exemption from federal income

taxes under section 501(c)(4) from IRS on June 28, 1995. The League has

stated that its mission includes protecting and defending benefits—Social

Security, Medicare, and veterans’ or military benefits—earned and paid for

by seniors. In 1997, the League had over 750,000 members and supporters,

according to a League official.

TREA created the League to address seniors’ issues beyond those

concerning TREA’s existing membership of retired military personnel,

according to the official. TREA’s Social Security-related mailings are

conducted by the League, this official said. A consumer group reported

that the League has been involved in the Social Security “notch” issue

since 1993.12 Other issues the League has addressed include cost-of-living

adjustments, Medicare, health care, and health maintenance organizations.

One of the League’s Social Security-related mailings has concerned the

notch issue. The letter informed individuals that “many Notch Victims

receive Social Security checks of $100, $500, and even $1,000 a year LESS

than they would if Congress passes Notch reform.” The letter asked

individuals who are notch victims for permission to include their names in

the League’s petition for notch reform that it would present to the

President and the Congress. It also asked people to financially support the

League’s effort to collect two million signatures for its petitions. (See fig.

V.1 at the end of this app. for a copy of the letter.)

Advocacy Activities The League reports using its educational materials to increase public

awareness. The organization distributes its newsletter, The Social Security

12Social Security retirees born in 1917 and beyond generally receive lower benefits than those born

earlier—a disparity commonly referred to as the “notch.” In 1972, the Congress adjusted the Social

Security formula, causing individuals born between 1910 and 1916 to receive higher benefit amounts

than intended. In 1977, the Congress corrected the formula and in effect reduced benefits to intended

levels for retirees born in 1917 and beyond.

Page 40 GAO/HEHS-97-69 Fund-Raising Letters
Appendix V 

TREA Senior Citizens League

& Medicare Advisor, 10 times a year to its most active supporters. It also

distributes a variety of literature on issues of interest to seniors such as

The Notch Victim’s Handbook and The Senior Activist’s Survival Manual.

The League reports conducting polls and gathering research information,

which it provides to lawmakers, its members, and the general public.

The League’s lobbying activities have included providing the results of its

surveys and petitions, sometimes included with its mailings, to the

Congress as well as providing elected officials information on seniors’

issues upon request.

Income and Expenses For tax years 1993 through 1995, TREA and the League received over 92

percent of their income from the public. Their combined revenues were

$4.5 million and $6.8 million for 1993 and 1994, respectively. In 1995, the

League reported revenues of $1.9 million. (See table V.1 for TREA’s and the

League’s financial profile based on IRS Form 990.) For the first 2 years,

their combined report showed income from activities such as insurance

sales, interest on savings, magazine advertising, and conventions. TREA

reported that less than 1 percent of its total income was unrelated to its

tax-exempt purpose and thus subject to federal income taxes. For tax year

1995, the League reported receiving commercial income of $76,000 from

interest on savings and its mailing list. It reported all of this income as

mission-related and therefore exempt from federal income taxes.

Page 41 GAO/HEHS-97-69 Fund-Raising Letters
Appendix V 

TREA Senior Citizens League

Table V.1: TREA’s and TREA Senior Citizens League’s Financial Profile

1995 Leaguea 1994 TREA 1993 TREA

Dollars in thousands

Amount Percent Amount Percent Amount Percent

Income from

General public $1,872 96.1 $6,403 94.6 $4,161 92.4

Taxable commercial

activities 0 0.0 5 0.1 7 0.2

Tax-exempt commercial

activities 76 3.9 360 5.3 333 7.4

Total income $1,948 100.0 $6,768 100.0 $4,501 100.0

Expenses by function

Public service activities 1,267 63.8 4,453 72.3 2,731 67.1

Fund-raising activities 456 23.0 1,432 23.3 1,079 26.5

Administrative activities 263 13.2 272 4.4 262 6.4

Total expenses $1,986 100.0 $6,157 100.0 $4,072 100.0

Expenses by services

Postage/shipping 970 48.8 1,760 28.6 730 17.9

Printing/publication 1,511 24.5 1,117 27.4

Mail list related 212 10.7 652 10.6 309 7.6

Membership related 590 9.6 542 13.3

Subtotal $1,182 59.5 $4,513 73.3 $2,698 66.3

Other services 804 40.5 1,644 26.7 1,374 33.7

Total expenses $1,986 100.0 $6,157 100.0 $4,072 100.0

Note: Percents may not add to 100 due to rounding.

a1995 was the first year the League reported as an independent organization.

Source: GAO summary of reporting on IRS Form 990.

Over the 3 years, expenses for both organizations have ranged from about

$2.0 million to $6.2 million. For these years, TREA and the League reported

that over 60 percent of their expenses were for public service activities

and about 25 percent were for fund-raising activities.

Relationships With

Other Businesses

TREA and the League used a contractor to conduct their fund-raising and

education programs. The contractor created and produced mail

solicitation packages and provided, or obtained under contract with

others, services for mail list brokerage, computer services, production,

Page 42 GAO/HEHS-97-69 Fund-Raising Letters
Appendix V 

TREA Senior Citizens League

printing, and mailings. A TREA official confirmed that the contracts were in

effect during the period covered by its 1993 and 1994 information returns,

and, since January 1995, the League has been assigned the terms and

conditions of TREA’s contract, according to a League official. A review of

TREA’s and the League’s 1993 through 1995 information returns shows that

expenses for services mentioned in the contract accounted for from 59 to

73 percent of their total expenses.

Page 43 GAO/HEHS-97-69 Fund-Raising Letters
Appendix V 

TREA Senior Citizens League

Figure V.1: TREA Fund-Raising Letter

Page 44 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

The Seniors Coalition, incorporated on September 17, 1990, received

exemption as a social welfare organization from federal income taxes

under section 501(c)(4) from IRS on July 15, 1991. The Seniors Coalition

has stated its mission as public education and lobbying on behalf of

seniors nationwide. The organization had one million members and

another one million supporters in 1995, according to a Coalition official.

The Seniors Coalition conducts prospective membership mailings on an

ongoing basis. Once a month, according to an official, The Seniors

Coalition sends mailings to alert members to publicly debated issues,

solicit contributions, and request membership renewals. Some of the

Social Security issues the organization has addressed have included

opposing Social Security tax increases, protecting Social Security, and

eliminating work penalties.

In one of these mailings, The Seniors Coalition accused the Congress of

“looting of the [Social Security] trust funds.” The Congress “stole the

money . . . and spent it on wasteful pork barrel spending projects . . .”, and

the letter warned individuals that the Social Security program “will be in

grave financial jeopardy in the future.” The letter asked individuals to

financially support The Seniors Coalition’s efforts to stop the Congress’

raid on the trust funds, restore money owed the trust funds, and insulate

the trusts funds from future congressional actions. The letter also asked

individuals to complete a survey and support its petition on the issue. (See

fig. VI.1 at the end of this app. for a copy of the letter.)

Advocacy Activities The Seniors Coalition conducts a wide range of activities to educate

members and represent seniors’ interests. In addition to monthly issue

alerts, the organization sends members its bimonthly newsletter, the

Senior Class, which features information of interest to older Americans. In

the past year, The Seniors Coalition said it has published over a dozen

papers and books on issues of concern to seniors and distributed them to

the media, the Congress, and the public. As examples, it cited articles

titled “Medicare: Elderly Lifeline Under Attack” and “100 Most Asked

Questions About Your Social Security Benefits.” The organization offers

members discounts on prescription drugs and also provides them a

toll-free number to inquire about specific issues, ask questions about

member services, or request publications.

The Seniors Coalition reports that its lobbying efforts have included

testifying before the Congress many times and encouraging individuals to

Page 45 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

send letters and other communications to legislators. Some of the issues

the organization has testified on include the Social Security earnings limit

and long-term care. During the past year, the organization has involved the

public in dozens of town hall meetings and rallies nationwide, according to

an official.

Income and Expenses For tax years 1992 through 1994, The Seniors Coalition received from

$8.8 million to $11.1 million (over 94 percent of its revenues) from the

public. (See table VI.1 for The Seniors Coalition’s financial profile based

on IRS Form 990.) During this period, its income from commercial

activities ranged from about $43,000 to $556,000. The organization

reported that about $43,000, $241,000, and $561,000 of income from

advertising and renting its mailing list in 1992, 1993, and 1994, respectively,

did not substantially support its tax exemption and was therefore subject

to federal income taxes.13 During this period, The Seniors Coalition

reported that over 70 percent of its total spending supported public service

activities and from 14 to 23 percent supported its fund-raising activities.

13Difference in income amounts of $556,000 and $561,000 is due to a $5,000 loss that The Seniors

Coalition reported in tax-exempt commercial activities.

Page 46 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

Table VI.1: The Seniors Coalition’s Financial Profile

1994 1993 1992

Dollars in thousands

Amount Percent Amount Percent Amount Percent

Income from

General public $9,961 94.7 $11,114 97.3 $8,815 99.5

Taxable commercial

activities 561 5.3 241 2.1 43 0.5

Tax-exempt commercial

activities –5a –0.0 70 0.6 0 0.0

Total income $10,517 100.0 $11,425 100.0 $8,858 100.0

Expenses by function

Public service activities 7,899 71.8 7,548 79.4 6,290 72.1

Fund-raising activities 2,121 19.3 1,364 14.3 2,024 23.2

Administrative activities 977 8.9 599 6.3 409 4.7

Total expenses $10,997 100.0 $9,511 100.0 $8,723 100.0

Expenses by services

Postage/shipping 3,183 28.9 3,059 32.2 2,437 27.9

Printing/publication 3,900 35.5 3,473 36.5 3,166 36.3

Mail list related 1,303 11.8 1,153 12.1 1,254 14.4

Computer 28 0.3 0 0.0 0 0.0

Subtotal $8,414 76.5 $7,685 80.8 $6,857 78.6

Other services 2,583 23.5 1,826 19.2 1,866 21.4

Total expenses $10,997 100.0 $9,511 100.0 $8,723 100.0

Note: Percents may not add to 100 due to rounding.

aThe Seniors Coalition reported a net loss in tax-exempt commercial activities.

Source: GAO summary of reporting on IRS Form 990.

Relationships With

Other Businesses

The Seniors Coalition used a contractor to provide membership

acquisition and creative and production services for its educational and

fund-raising programs. Among the services the fund-raising contractor

provided were copy writing, acquiring mailing lists, printing, and mailing

of literature. The fund-raising contractor was authorized to contract with

other vendors on the Coalition’s behalf, although the Coalition remained

liable for actual payments to vendors. The contractor provided services for

most of the period covered by the three returns we reviewed, according to

Page 47 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

a Coalition official.14 The Seniors Coalition also had contracts with three

other businesses to receive cashier, list marketing, and data processing

services. The contracts with two of the vendors required them to recognize

the fund-raising contractor as The Seniors Coalition’s agent for contract

administration, and the third vendor was affiliated with the fund-raising

contractor. A review of The Seniors Coalition’s tax years 1992 through

1994 information returns shows that expenses for services mentioned in

the contract accounted for about 77 to 81 percent of the organization’s

total expenses.

14The official said that The Seniors Coalition was reorganized in Nov. 1992 and no longer had records

relevant to the organization before it was reorganized.

Page 48 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

Figure VI.1: The Seniors Coalition Fund-Raising Letter

Page 49 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

Page 50 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

Page 51 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

Page 52 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

Page 53 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VI 

The Seniors Coalition

Page 54 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

60/Plus Association incorporated on October 2, 1990, and received its

exemption from federal income taxes as a social welfare organization

under section 501(c)(4) from IRS on March 28, 1991. In its annual

information returns, 60/Plus stated its purpose as protecting seniors’

rights. In applying for an exemption from federal income taxes, the

organization said it would mainly educate the general public about seniors’

concerns, including, but not limited to, the Social Security and Medicare

programs. In its application to IRS for tax exemption, 60/Plus said that it

planned to conduct educational activities that would include distributing

newsletters, journals, alerts, and letters and convening conferences. Its

advocacy activities would include encouraging seniors to express their

views on various issues to the Congress, it said. The organization had

about one-half million members in 1997, according to an official.

In one of its mailings, 60/Plus alleged that “President Clinton has requested

a 70% Social Security tax increase for about 10 million seniors” and that

the President “wants to increase many other taxes that affect seniors.” The

letter informed individuals that the President will certainly get his way

unless they are willing to protest the tax increases. 60/Plus’s letter asked

individuals to support its protest letter to the President and members of

the Congress and to complete its Social Security survey. The letter also

requested individuals to financially contribute to support 60/Plus’s efforts

to deliver more letters, send more surveys, and contact more voters. (See

fig. VII.1 at the end of this app. for a copy of the letter.)

Advocacy Activities 60/Plus did not respond to our certified letter requesting information about

the services the organization provides. In a 1997 meeting, a 60/Plus official

told us that the organization’s fund-raising letters are its primary way of

communicating with and educating members. Its members also receive its

newsletter, Senior Voice, three to four times a year. Some of the

organization’s other educational activities include participating in radio

and television interviews and issuing press statements about seniors’

issues, according to this official. 60/Plus sends general literature on the

organization to members of the public who inquire about it. The

organization does not offer any ancillary services such as insurance.

Income and Expenses In its tax years 1993 and 1994 information returns, 60/Plus reported

income of $352,000 and $1.4 million, respectively. It listed contributions

from the public as its exclusive source of income. (See table VII.1 for

60/Plus’s financial profile based on IRS Form 990.) 60/Plus’s expenses for

Page 55 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

the 2 years were $672,000 and $1.9 million, respectively. For each of the 2

years, 60/Plus reported that a little over 70 percent of its total expenses

were for public service activities and a little over 20 percent for fundraising activities.

Table VII.1: 60/Plus Association’s

Financial Profile

1994a 1993b

Dollars in thousands

Amount Percent Amount Percent

Income from

General public $1,367 100.0 $352 100.0

Taxable commercial activities 0 0.0 0 0.0

Tax-exempt commercial

activities 0 0.0 0 0.0

Total income $1,367 100.0 $352 100.0

Expenses by function

Public service activities 1,368 72.6 494 73.5

Fund-raising activities 398 21.1 165 24.6

Administrative activities 119 6.3 13 1.9

Total expenses $1,885 100.0 $672 100.0

Expenses by services

Postage/shipping 586 31.1 20 3.0

Printing/publication 338 17.9 72 10.7

Mail list related 669 35.5 501 74.6

Computer 42 2.2 29 4.3

Subtotal $1,635 86.7 $622 92.6

Other services 250 13.3 50 7.4

Total expenses $1,885 100.0 $672 100.0

Note: Percents may not add to 100 due to rounding.

a60/Plus reported a $518,000 deficit.

b60/Plus reported a $321,000 deficit; 1993 was the first year 60/Plus filed a Form 990 with the

states.

Source: GAO summary of reporting on IRS Form 990.

Relationships With

Other Businesses

60/Plus contracted with a business to conduct its educational and fundraising programs. The contract allowed the fund-raising contractor to

either perform or hire other vendors to perform services such as designing

programs; writing copy; obtaining mailing lists; printing, producing, and

Page 56 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

mailing letters; and providing computer services. 60/Plus’s contract with

its fund-raising contractor covered the 1993 through 1994 information

returns we reviewed. Our review of the two information returns revealed

that 60/Plus reported that from 86 to 92 percent of its total expenses were

for services also mentioned in the contract with its fund-raising

contractor.

Page 57 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

Figure VII.1: 60/Plus Association Fund-Raising Letter

Page 58 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

Page 59 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

Page 60 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

Page 61 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

Page 62 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VII 

60/Plus Association

Page 63 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VIII 

United Seniors Association

United Seniors Association (USA), incorporated on May 17, 1991, received

exemption from federal income taxes as a social welfare organization

under section 501(c)(4) from IRS on July 25, 1991. The organization had

400,000 members and 500,000 supporters in 1995, according to a USA

official. USA has stated that its purpose is to educate and inform seniors

and retirees about matters of interest to older Americans, including the

Social Security and Medicare programs.

An official said the organization communicates with members on a variety

of issues, mainly through mailings. Mailings have covered issues such as

Social Security, Medicare, and health care reform.

The letter accompanying one of USA’s Social Security-related mailings

informed individuals that “the tax increases on Social Security benefits

proposed [by the President] can be stopped.” The letter alleged that

politicians stole their money and “want to tax more of their benefits and

then turn around and cut Social Security benefits” instead of cutting their

“special interest spending,” which was the real cause of the federal deficit.

USA’s letter asked individuals to sign its protest letter relating to these

issues and to financially contribute to help USA alert other seniors about

the attacks on Social Security. (See fig. VIII.1 at the end of this app. for a

copy of the letter.)

Advocacy Activities USA members receive USA’s newsletter, The Senior American, about seven

times a year, according to an official. The organization also publishes a

variety of other informative literature, which it distributes to senior

Americans and lawmakers. Since June 1995, USA has hosted a weekly cable

television program designed for seniors, according to the official. Among

the services the organization provides its members are discounts on

prescription drugs, eyewear, hotel accommodations, and rental cars.

The organization uses mailings to alert members and prospective members

to events of interest to them and to solicit their opinions on issues. USA’s

mailings often include response devices such as petitions, surveys, or

mailgrams. USA compiles responses to surveys, petitions, and mailgrams

and provides the information to the Congress, according to the official.

USA reports that it regularly lobbies the Congress on behalf of its members

and has testified before that body on a variety of issues, including

repealing the Social Security tax, Medicare reform, and pension

Page 64 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VIII 

United Seniors Association

protection. The organization reports regularly hosting or participating in

town hall meetings and other forums on elderly issues nationwide.

Income and Expenses For tax years 1991 through 1993, income ranged from about $2.1 million to

$5.1 million, with the public’s portion ranging from about 88 to 94 percent

of USA’s revenues. (See table VIII.1 for USA’s financial profile based on IRS

Form 990.) USA reported mail list rental and deferred income as the

sources of its other income. The organization reported that all of its other

income was related to its mission and therefore exempted from federal

income taxes.

Table VIII.1: USA’s Financial Profile

1993 1992 1991

Dollars in thousands

Amount Percent Amount Percent Amount Percent

Income from

General public $4,830 94.4 $5,295 92.0 $1,807 88.1

Taxable commercial

activities 0 0.0 0 0.0 10 0.5

Tax-exempt commercial

activities 285 5.6 463 8.0 234 11.4

Total income $5,115 100.0 $5,758 100.0 $2,051 100.0

Expenses for

Public service activities 2,721 46.4 2,998 48.8 937 49.2

Fund-raising activities 2,182 37.2 970 15.8 379 19.9

Administrative activities 966 16.5 2,178 35.4 590 31.0

Total expenses $5,869 100.0 $6,146 100.0 $1,906 100.0

Expenses by services

Postage/shipping 1,337 22.8 1,433 23.3 603 31.6

Printing/publication 1,720 29.3 1,993 32.4 597 31.3

Mail list related 434 7.4 560 9.1 228 12.0

Subtotal $3,491 59.5 $3,986 64.9 $1,428 74.9

Other services 2,378 40.5 2,160 35.1 478 25.1

Total expenses $5,869 100.0 $6,146 100.0 $1,906 100.0

Note: Percents may not add to 100 due to rounding.

Source: GAO summary of reporting on IRS Form 990.

Page 65 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VIII 

United Seniors Association

For the 3 years, USA reported that from $937,000 to $3 million (around

48 percent) of its total spending supported public service activities. During

this period, USA’s spending for fund-raising ranged from about 20 to about

37 percent of its total spending.

Relationships With

Other Businesses

In 1994 state registration documents, USA stated having used three

contractors to conduct its educational and fund-raising programs. Services

received from one fund-raising contractor included consulting services for

(1) creating, designing, developing, and producing fund-raising solicitation

materials; (2) increasing membership; and (3) arranging for production/

mail shop services for newsletters. A second fund-raising contractor

advised USA on creating and producing mailing lists and mail packages.

The third contractor advised USA on its direct mail program and created

and produced packages for mailing. An official said the organization

received the services of the three contractors after the period covered by

its 1991 through 1993 information returns. USA did not use a fundraising contractor before 1994 but instead conducted its fund-raising

activities in house. USA also reported having contracts with three lobbyists,

a media relations business, a financial management services, and a

consultant to produce direct mail packages. From 1991 through 1993, USA

reported that expenses for services specified in these contracts accounted

for about 75 percent of its total expenses.

Page 66 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VIII 

United Seniors Association

Figure VIII.1: USA Fund-Raising Letter

Page 67 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VIII 

United Seniors Association

Page 68 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VIII 

United Seniors Association

Page 69 GAO/HEHS-97-69 Fund-Raising Letters
Appendix VIII 

United Seniors Association

Page 70 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 71 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 72 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 73 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 74 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 75 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 76 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 77 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 78 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 79 GAO/HEHS-97-69 Fund-Raising Letters
Appendix IX 

Comments From the Social Security

Administration and Six Organizations

Page 80 GAO/HEHS-97-69 Fund-Raising Letters
Appendix X 

Major Contributors to This Report

Roland H. Miller III, Assistant Director, (202) 512-7246

Jacquelyn Stewart, Senior Evaluator

James Wright, Assistant Director

John Smale, Social Science Analyst

(105155) Page 81 GAO/HEHS-97-69 Fund-Raising Letters
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 6015

Gaithersburg, MD 20884-6015

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100