U.S. Postal Service: Factors Affecting Fund-Raising Stamp Sales Suggest Lessons Learned
Published: 2005-09-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Congress has directed the U.S. Postal Service to issue three fund-raising stamps, also called semipostals, since 1998. These stamps are sold at a higher price than First-Class stamps, with the difference going to federal agencies for specific causes. The proceeds from the three stamps address breast cancer research, assistance to families of emergency personnel killed or permanently disabled in the terrorist attacks of September 11, and domestic violence. The law authorizing the Breast Cancer Research stamp directed GAO to report on the fund-raising results. To provide additional information to the Congress, GAO expanded the study to include all three semipostals. GAO's study addressed (1) the amounts raised and the factors affecting sales, (2) how the designated agencies used the proceeds and reported the results, and (3) lessons learned for the Postal Service, agencies receiving the proceeds, and others.
section_title: What GAO Found
paragraphs: Over $56 million has been raised through semipostal sales as of June 2005, and sales were likely affected by several key factors. Individually, proceeds totaled $44 million for the Breast Cancer Research stamp, over $10.5 million for the Heroes of 2001 stamp, and nearly $2 million for the Stop Family Violence stamp. Sales patterns and levels differed greatly, with four key factors affecting sales patterns: (1) fund-raising cause, (2) support of advocacy groups, (3) stamp design, and (4) promotion by the Postal Service. The designated federal agencies currently award or plan to award grants with the proceeds; none of the agencies has reported specifically on results. Breast Cancer Research stamp proceeds have been used to award research grants by the National Institutes of Health and the Department of Defense. No grants have yet been awarded with the proceeds from the two other semipostals. The Federal Emergency Management Agency plans to distribute Heroes of 2001 stamp proceeds through grants to families of emergency personnel killed or permanently disabled from the September 11 attacks, while the Department of Health and Human Services plans to use Stop Family Violence stamp proceeds for grants to organizations for projects aimed at enhancing services to children exposed to domestic violence. Key lessons that have emerged from the three semipostals: (1) the nature of the charitable cause can greatly affect sales patterns and other results. A disaster, for example, is more likely to have a brief but intense response, while an ongoing health issue will have a longer one; (2) early and continued involvement of advocacy groups helps sustain semipostal support; (3) stamp design, promotion, and clear understanding about how proceeds will be used can greatly affect consumers' response; (4) semipostals generate proceeds immediately, but the logistics of using the moneys raised takes much longer, and (5) reporting can enhance accountability. Congress included a reporting requirement in the Semipostal Authorization Act of 2000, but these three semipostals are not subject to that requirement.

section_title: Letter
paragraphs: Since 1998, Congress has called for the U.S. Postal Service (Service) to  issue the first three fund-raising stamps in the nation’s history. These  stamps, called “semipostals,” are First-Class postage stamps that are sold at  a premium over their postage value, in order to help provide funding for a  designated charitable cause. The semipostal proceeds are transferred from  the Service to designated federal agencies that administer the funds. The  three semipostals include the following:   the Breast Cancer Research stamp, issued in 1998, which funds breast  cancer research at the National Institutes of Health (NIH) and the  Department of Defense (DOD);   the Heroes of 2001 stamp, issued in 2002 to assist the families of  emergency relief personnel who were killed or permanently disabled in  the terrorist attacks of September 11, 2001, through a program  administered by the Federal Emergency Management Agency (FEMA);  and  the Stop Family Violence stamp, issued in 2003 to fund domestic  violence prevention programs at the Department of Health and Human  Services (HHS).
Although each of the three existing semipostals was mandated by  Congress, the Semipostal Authorization Act of 2000 gave the Service the  authority to issue and sell semipostals on its own “in order to advance such  causes as the Service considers to be in the national public interest and  appropriate.” This act and the related regulations establish the criteria for  such things as selecting causes, establishing prices, and reporting annually  on how the money is being used. The existing semipostals were not issued  under this authority and only certain provisions of this act apply to them.  Although the Service has not yet exercised this authority, new semipostals  continue to be proposed by Congress, and advocates and fund-raising  experts view semipostals as an easy way for the public to contribute funds  to charitable causes.
The Stamp Out Breast Cancer Act required that we issue a report to  Congress on the Breast Cancer Research stamp no later than 3 months  before the end of the stamp’s authorized sales period. We issued our first  report under this requirement in April 2000, and Congress has subsequently  extended the sales period for the stamp three times, resulting in a follow-on  report in September 2003 and this study. The authorized sales period for  the Breast Cancer Research stamp is currently scheduled to expire  December 31, 2005. However, legislation is currently pending that would  extend the sales period for the Breast Cancer Research stamp until December 31, 2007. To provide additional information to Congress, we  have expanded this current study to all three semipostals. Accordingly, this  report examines (1) the amount of money raised by the semipostals and  what factors appear to have affected sales; (2) how the designated federal  agencies used funds raised by the semipostals and how they reported  results; and (3) the lessons learned from these semipostals for the Service,  agencies receiving semipostal proceeds, and other stakeholders. Appendix  II of this report also provides information on the costs associated with the  semipostal program and the status of our recommendations regarding cost- recovery criteria made to the Postmaster General in our September 2003  report.
To address these objectives, we obtained detailed sales and cost  information from the Service on each of the three semipostals and gathered  information from a broad spectrum of federal officials, fund-raising  experts, and advocacy groups, about each of the semipostals and the  related charitable causes. We interviewed officials from the Service and the  federal agencies receiving semipostal proceeds and gathered and reviewed  agency documents pertaining to semipostal programs. We consulted  organizations with fund-raising expertise, such as the Association of  Fundraising Professionals, the American Red Cross, and the Better  Business Bureau’s (BBB) Wise Giving Alliance, about fund-raising patterns  and factors that influence fund-raising efforts for different charitable  causes. In addition, we identified and interviewed key national advocacy  groups affiliated with breast cancer, emergency personnel affected by the  terrorist attacks of September 11, and domestic violence prevention  regarding their opinions about and experiences with the semipostals. See  appendix I for more details regarding our scope and methodology.
We requested comments on a draft of this report from the Service,  Administration for Children and Families (ACF), DOD, FEMA, HHS and  NIH. The Service and DOD provided written comments, which are  reprinted in appendixes VI and VII, respectively. ACF, FEMA, HHS and NIH  did not provide comments on this report. We conducted our review from  January 2005 through August 2005 according to generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: The three stamps issued thus far in the nation’s semipostal program have  all been authorized through separate congressional acts pertaining solely to  those stamps. The Stamp Out Breast Cancer Act required that the Service  issue a Breast Cancer Research stamp, the nation’s first semipostal. Two  additional semipostals—the Heroes of 2001 and Stop Family Violence  stamps—were mandated by Congress in the 9/11 Heroes Stamp Act of 2001  and the Stamp Out Domestic Violence Act of 2001. Figure 2 shows the  three semipostals.
Following the authorization of these semipostals by Congress, a number of  stakeholders became involved with the semipostals, including the Service,  designated federal agencies, and advocacy groups. For example, after  Congress mandated the semipostals, the Service issued the stamps and  then transferred semipostal proceeds to the designated federal agencies,  which then directed the funds toward the identified causes. Additionally,  advocacy groups involved with the charitable causes have assisted in  promoting the semipostals. Table 1 identifies the various stakeholders and  summarizes their primary roles related to the semipostals.
Authorized for 2 years in 1998, the Breast Cancer Research stamp has  subsequently been reauthorized three times, and there are proposals in  Congress to further extend the sales period through December 31, 2007.  The Breast Cancer Research stamp raises money for breast cancer  research programs at NIH and DOD, with the former receiving 70 percent  of the funds raised and the latter receiving the remaining 30 percent. The  Heroes of 2001 stamp was offered for sale from June 7, 2002, to December  31, 2004, and funds raised were transferred to FEMA to provide assistance  to the families of emergency relief personnel who were killed or  permanently disabled in the line of duty in connection with the terrorist  attacks against the United States on September 11, 2001. The Service  started selling the Stop Family Violence stamp on October 8, 2003, and it is  scheduled to expire on December 31, 2006. Proceeds from the Stop Family  Violence stamp are being transferred to HHS for domestic violence  programs. For a period of just over 1 year, between October 8, 2003, and  December 31, 2004, all three semipostals were on sale simultaneously.  Figure 3 shows the authorized sales periods for each of the semipostals.
Separately from the provisions that authorized the three semipostals, the  Semipostal Authorization Act gave the Service the authority to issue  semipostals that it considers to be appropriate and in the national public  interest; however, the Service has not yet exercised this authority. Further,  the Service has indicated that it does not plan to issue any semipostals  under its own authority until sales of the Breast Cancer Research stamp  and other congressionally authorized semipostals have concluded.  However, legislative proposals to establish new semipostals continue to be  made. In the 109th Congress, for example, a bill has been introduced to  establish a new semipostal to benefit the Peace Corps. In February 2005,  the House Committee on Government Reform, the oversight committee for  the Service, adopted a rule that stated that the Committee will not give  consideration to legislative proposals specifying the subject matter of new  semipostals. That rule also stated that the Service should determine the  subject matter of new semipostals. In September 2005, a bill was  introduced to establish a semipostal to provide disaster relief for residents  of Louisiana, Mississippi, and Alabama who were affected by Hurricane  Katrina. The proceeds are to be transferred to the American Red Cross  Disaster Relief Fund for Hurricane Katrina, which is not a government  entity. This contrasts with the existing semipostals that transfer their  proceeds to designated federal agencies.
In our previous work, we reported that the Breast Cancer Research stamp  has been an effective fund-raiser and that funds raised through sales of the  stamp had contributed to key insights and approaches for the treatment of  breast cancer. Most of the key stakeholders we spoke with and, according  to our survey, members of the public viewed the stamp as an appropriate  way of raising funds for a nonpostal purpose. We expressed some  concerns, however, about the Service’s identification and recovery of costs  associated with carrying out the act. We recommended that the Service  reexamine and, as necessary, revise its Breast Cancer Research stamp cost- recovery regulations. We also suggested that Congress consider  establishing annual reporting requirements for NIH and DOD.
section_title: Semipostals Have Raised Over $56 Million, with Several Factors Likely Affecting Sales
paragraphs: Semipostals have raised over $56 million to date, and sales were likely  impacted by several factors. In addition to variations in the amounts raised  by each of the semipostals, sales patterns were also different, and on the  basis of our discussions with Service officials, advocacy groups, and other  stakeholders, we identified four key factors that affected sales, including  (1) fund-raising cause, (2) support of advocacy groups, (3) stamp design,  and (4) Service promotional activities.
subsections: section_title: Semipostal Proceeds and Sales Patterns Varied Substantially
paragraphs: The funds raised by the semipostals vary from $44 million for the Breast  Cancer Research stamp to over $10.5 million for the Heroes of 2001 stamp  and nearly $2 million for the Stop Family Violence stamp, totaling over $56  million. The length of time that each semipostal has been sold affected the  amounts raised: the Breast Cancer Research stamp has been available for  7 years, the Heroes of 2001 stamp was available for just over 2½ years, and  the Stop Family Violence stamp has been available for under 2 years.
Semipostal sales patterns reveal marked differences. Breast Cancer  Research stamp sales have fluctuated since the semipostal’s issuance in  1998 but have remained at a comparably high level over time (see fig. 4).  The Heroes of 2001 and Stop Family Violence stamps each had initial sales  surges—although at much different levels—with subsequent declines.  Sales of the Breast Cancer Research stamp have averaged over 22 million  semipostals per quarter since it was issued in 1998, with total sales of 606.8  million semipostals by May 31, 2005. Sales of the Heroes of 2001 stamp  averaged over 13 million semipostals per quarter throughout its sales  period and totaled 132.9 million, although over 50 percent of total sales  occurred in the first two-quarters after issuance in 2002. Finally, as of May  31, 2005, sales of the Stop Family Violence stamp have averaged over 4  million semipostals per quarter and total 25.3 million since issuance.
section_title: Sales Patterns Were Influenced by Several Key Factors
subsections: section_title: Fund-Raising Cause: Awareness, Appeal, and Staying Power
paragraphs: Public awareness about the fund-raising causes represented by the  semipostals likely affected sales levels. The two semipostals addressing  causes with high levels of public awareness—finding a cure for breast  cancer and supporting the families of September 11 emergency  personnel—had higher sales than the Stop Family Violence stamp, which  raises funds for domestic violence programs, a cause that, while well  known, has a lower profile. An official with the Komen Foundation pointed  out that in the case of the Breast Cancer Research stamp, the fact that  about one in eight women are affected by breast cancer keeps the subject  in the public spotlight. Likewise, the national significance of the events  surrounding the September 11 terrorist attacks ensured a high level of  public awareness regarding the cause represented by the Heroes of 2001  stamp. In contrast, Service officials pointed to the lack of general coverage  about domestic violence, which may have limited sales of the Stop Family  Violence stamp.
The appeal of the particular fund-raising cause was also a factor affecting  semipostal sales. While the Breast Cancer Research and Heroes of 2001  stamps were associated with causes that generate a strong and supportive  response, the Stop Family Violence stamp deals with a cause that may  evoke a more complex response. Officials with the Association of  Fundraising Professionals noted that certain causes generate a greater  response than others, regardless of fund-raising methods. According to an  official with the BBB Wise Giving Alliance, for example, four popular fund- raising causes currently are cancer, children’s issues, relief efforts, and  animals, although the popularity of fund-raising causes fluctuates over  time. Such an impact can be particularly acute for campaigns that use  affinity fund-raising, whereby donors demonstrate their support for a  specific cause with a public sign of their commitment. Fund-raising experts  we spoke with at the Association of Fundraising Professionals stated that  semipostals are examples of this kind of effort, and officials with the  American Red Cross noted that other well-known examples of such  marketing include the Lance Armstrong Foundation’s LiveStrong yellow  bracelets and pink breast cancer awareness ribbons. Such branding can be  problematic, however, for causes that, for a variety of reasons, may be  more difficult to embrace. For example, officials with the National  Coalition Against Domestic Violence and the Service mentioned that  consumers may be reluctant to use the Stop Family Violence stamp given  that the fund-raising cause is particularly sensitive. Service officials noted  that some consumers pay close attention to the ways in which stamps can  send intended or unintended messages about the sender or receiver of  letters.
The difference in appeal between fund-raising causes can also be seen in  the degree to which they readily attract support or promotion by  businesses or organizations. In the case of the semipostals, American  Express and NASCAR approached the Service about partnership  promotions for the Breast Cancer Research and Heroes of 2001 stamps,  respectively. The partnerships resulted in promotion for the semipostals,  done largely at the expense of the Service’s partners, who were able to  affiliate themselves with these popular causes. American Express  advertised the Breast Cancer Research stamp in print and inserts, while  NASCAR placed an image of the Heroes of 2001 stamp prominently on a  stock car at very little cost to the Service (see fig. 5). The Service did not  receive any comparable offers in support of the Stop Family Violence  stamp.
While awareness and appeal may affect the size of the response, the length  of the response may be related to another characteristic: whether the fund- raising cause is for an episodic event, such as a disaster, or for an ongoing  concern, such as finding a cure for a disease. The Heroes of 2001 stamp  sales reflected the dramatic emotional spike typically associated with  episodic events, with fund-raising efforts building quickly and then  declining as events begin to retreat from the public spotlight or become  affected by subsequent developments, according to officials with the  American Red Cross and the BBB Wise Giving Alliance. These  organizations pointed to the fund-raising efforts generated by the  December 2004 tsunami as an example of another episodic event, noting  that the tsunami fund-raising surge lasted about 30 days. Officials with the  Association of Fundraising Professionals told us that such fund-raising  spikes are common for one-time events. More specifically, many September  11 fund-raising efforts experienced the same initial surge and the  subsequent decline that the Heroes of 2001 stamp experienced, according  to representatives with the New York City Police Foundation, the  September 11th Families Association, and the National Association of  Fallen Firefighters. By contrast, ongoing causes, such as finding a cure for  breast cancer, are more likely to have staying power over time, according  to fund-raising experts.
section_title: Advocacy Groups: Capacity and Activities Undertaken
paragraphs: Sales of the semipostals were likely affected by the capacity of advocacy  groups working to promote them. Several of the breast cancer advocacy  groups supporting the Breast Cancer Research stamp have large networks  of members and have promoted the semipostal at events involving  thousands of participants. For example, the Komen Foundation, an active  supporter of the semipostal, has more than 80,000 individuals in an online  advocacy group involved in lobbying to extend sale of the semipostal. The  foundation also conducts “Race for the Cure” events around the world,  with more than 1 million walkers or runners participating each year since  2000; and a partnership effort between the Komen Foundation and Yoplait  (and its parent company General Mills) has contributed over $14 million to  the breast cancer cause over 7 years. In contrast, family violence  prevention groups tend to be smaller, according to officials with the  Association of Fundraising Professionals. The National Resource Center on  Domestic Violence noted that it has a mailing list of about 5,000 to which it  has sent information about the Stop Family Violence stamp; and another  group, the National Domestic Violence Hotline, provided information about  the semipostal to over 100 local domestic violence programs. Further, an  official with the National Coalition Against Domestic Violence described a  cell phone donation program that earned about $2 million over 6 or 7 years.  Finally, Service officials noted that there were no organized groups to  coordinate with when the Heroes of 2001 stamp was developed.
Beyond the capacity of advocacy groups, the specific efforts undertaken in  support of the semipostals by such groups over time likely affected sales.  Several breast cancer advocacy groups have actively supported the Breast  Cancer Research stamp since its issuance, while comparatively less was  done by advocacy groups to support the Heroes of 2001 or Stop Family  Violence stamps, which may account for their declining sales trends.  Service officials link semipostal sales to the support of advocacy groups.
Several breast cancer advocacy groups that we spoke with mentioned  carrying on activities to promote the Breast Cancer Research stamp.  (Table 2 provides examples of these activities.) Likewise, Service  officials stated that grassroots support given to the Breast Cancer  Research stamp helps to explain its long-term success, pointing to the  organized support of the semipostal by breast cancer advocacy groups  and individuals, which has included use by doctors’ offices, sponsored  walks and runs, and activities surrounding Breast Cancer Awareness  Month.
None of the advocacy groups affiliated with emergency personnel  affected by the terrorist attacks of September 11 that we spoke with  regarding the Heroes of 2001 stamp had engaged in promotional  activities for the semipostal. The advocacy groups we spoke with were  aware that the funds raised through sales of the semipostal were to be  directed to September 11 emergency responders in some capacity, but  they were unaware of the specifics of how the proceeds would be used.  Like the Stop Family Violence stamp, sales of the Heroes of 2001 stamp  did not have the boosts in sales seen periodically with the Breast Cancer  Research stamp, although its initial sales were higher. The semipostal’s  limited staying power may have reflected the lack of advocacy group  activity on behalf of the semipostal.
Several domestic and family violence advocacy groups mentioned that  while they had intended to support the Stop Family Violence stamp with  promotional activities, they have done less than originally planned.  Confusion about how Stop Family Violence stamp proceeds would be  used led some domestic and family violence advocacy groups to limit  their promotional activities on behalf of the semipostal. As a result,  although some local advocacy groups carried out promotional activities  with local post offices, such as semipostal unveiling ceremonies, the  national domestic or family violence groups that we spoke with typically  limited their promotional activities to articles in newsletters or features  on group Web sites. Some domestic and family violence advocacy  groups acknowledged that they could have done more to promote the  Stop Family Violence stamp and that the semipostal’s sales were likely  adversely affected by this lack of promotion.
section_title: Stamp Design: Image and Message Clarity
paragraphs: The designs of both the Breast Cancer Research and Heroes of 2001 stamps  were lauded by stakeholders; however, there was concern that the design  of the Stop Family Violence stamp may have negatively affected sales of  that semipostal. Both the Breast Cancer Research and Heroes of 2001  stamps had designs that were praised by stakeholders as having inspiring  images that conveyed some information about where proceeds would be  directed. Consumers could assume that funds would go to breast cancer  research or September 11 emergency personnel in some capacity,  according to officials with the American Red Cross. However, officials with  the Association of Fundraising Professionals noted that the exact use of the  funds was not clearly spelled out on either semipostal. Further, in-store  messaging also provided limited information. (See fig. 6 for an example of  an in-store counter card featuring the semipostals.) In contrast, although  the design of the Stop Family Violence stamp won an international award,  and the story behind the design was described as inspiring by some  advocacy groups, advocates with such organizations as the Family  Violence Prevention Fund and the National Network to End Domestic  Violence questioned how likely postal customers would be to buy the  stamp to use on their mail, given the image of a crying child. In addition, the  semipostal’s design and information provided by the Service on in-store materials are less clear regarding how semipostal proceeds are to be  used,referring to both domestic and family violence, which are viewed by  some as separate causes.
Both the Breast Cancer Research and Heroes of 2001 stamps had extensive  Service advertising campaigns. The Service spent nearly $900,000 to  advertise the Breast Cancer Research stamp and more than $1.1 million for  the Heroes of 2001 stamp. This advertising included a billboard in Times  Square for the Breast Cancer Research stamp and a national print  advertising campaign for the Heroes of 2001 stamp. The Service also  received the Gold “Reggie” award from the Promotion Marketing  Association for the Service’s efforts in promoting the Breast Cancer  Research stamp.
As the result of an overall reduction in the Service’s budget, advertising for  all stamps, including semipostals, has been limited to in-store messaging  since 2003. As a consequence, Service officials determined that all funds  spent to advertise semipostals would be deducted from the totals raised  through their sales. This policy change had a marked impact on  promotional activities for the Stop Family Violence stamp, which was  issued in October 2003. While advertising costs associated with the Breast  Cancer Research and Heroes of 2001 stamps had been paid by the Service,  all advertising costs for the Stop Family Violence stamp were to be  deducted from the stamp’s proceeds. In light of these limitations, the  Service met with HHS before the Stop Family Violence stamp was issued.  At this meeting the Service proposed spending $1.5 million or more on an  advertising campaign that would be funded by the future semipostal  proceeds. Because of uncertainty about how much money would be raised  through sales of the Stop Family Violence stamp, HHS decided that the  proposed advertising campaign not be pursued. In lieu of such a campaign,  the Service and HHS looked to the advocacy groups to promote the  semipostal. The Service and HHS officials met with advocacy group  representatives and provided them with examples of the types of  promotional activities that breast cancer advocacy groups had done to help  publicize the Breast Cancer Research stamp and a poster for use in  promotional activities. Through March 31, 2005, the Service spent about  $77,000 to advertise the Stop Family Violence stamp, and this amount was  recovered from semipostal proceeds. Table 3 provides examples of Service  promotional efforts and partnerships in support of the semipostals.
Service officials said that differences in sales among the three semipostals  were not the result of the level of actions on the part of the Service. They  said a semipostal’s success is dependent on the support provided by  external groups or individuals. Service officials point out that for each  semipostal, the Service issued a field and press kit and met with officials  from the agencies receiving semipostal proceeds. In addition, the Service  initiated kickoff events for each of the semipostals at the White House,  with involvement from either the President or First Lady (see fig. 7).  Finally, Service officials noted that local post offices are available to  sponsor local events at the discretion of the postmaster. For example, the  Service’s South Georgia District employees established the “Circle of Hope” campaign to promote and raise funds for the Breast Cancer Research  stamp. In 2004, the campaign raised an estimated $21,000 in proceeds  through stamp sales. Likewise, the Cardiss Collins Postal Facility in  Chicago held a rededication ceremony for the Stop Family Violence stamp  on August 2, 2005, in collaboration with the Illinois Secretary of State and  officials from the Chicago Abused Women Coalition and the Chicago Police  Department.
section_title: Semipostal Proceeds Will Be Used for Grants, with Limited Reporting on Specific Uses
paragraphs: The federal agencies receiving semipostal proceeds currently award or  plan to award these funds using grants, and although each agency has  collected and maintained information on semipostal proceeds, none has  reported specifically on their use of proceeds thus far. NIH and DOD use  Breast Cancer Research stamp proceeds to award research grants under  existing programs. HHS has not distributed any proceeds from the Stop  Family Violence stamp, but officials reported that they have established  new grants within an existing program to award grants for domestic  violence programs. While the other semipostals address ongoing causes,  the Heroes of 2001 stamp raised funds for an episodic event without an  established mechanism for distributing such funds. As a result, FEMA is  establishing a new program and accompanying regulations for distributing  Heroes of 2001 stamp proceeds to families of emergency relief personnel  who were killed or permanently disabled in the line of duty in connection  with the September 11 terrorist attacks. The laws authorizing these three  specific semipostals do not include reporting requirements such as those of  the Semipostal Authorization Act. Of the four agencies, FEMA and HHS  have plans to report specifically as to the use of semipostal proceeds.
subsections: section_title: Breast Cancer Research Stamp and Stop Family Violence Stamp Proceeds Are Used for Grants within Established Programs
subsections: section_title: NIH and DOD: Grants for Breast Cancer Research Under Way
paragraphs: Both NIH and DOD reported that they began receiving Breast Cancer  Research stamp proceeds from the Service in November 1998, and breast  cancer research grants have been awarded using established programs at  both agencies since June 2000 and June 1999, respectively. NIH initially  directed these proceeds to the National Cancer Institute (NCI) to award  high-risk research grants through the “Insight Awards to Stamp Out Breast  Cancer” initiative. This initiative was specifically designed for the Breast  Cancer Research stamp proceeds, but exists within NCI’s grants program.  One example of these grants includes funding research related to the  development of a potential antitumor drug. In 2003, NIH approved new  Breast Cancer Research stamp grants through the “Exceptional  Opportunities in Breast Cancer Research” initiative, also administered by  NCI, which uses semipostal proceeds to fund more traditional research.  According to NIH officials, this change was made when it was determined  that there were highly meritorious research applications outside the  funding ability of NCI, and they noted that many outstanding grant  applications would remain unfunded without the use of semipostal  proceeds. Exceptional Opportunities awards have covered breast cancer  research areas that include prevention, diagnosis, biology, and treatment.  DOD uses Breast Cancer Research stamp proceeds to fund innovative  approaches to breast cancer research through “Idea Award” grants under  its existing Breast Cancer Research Program, which is administered by the  U.S. Army Medical Research and Materiel Command. The scope of the  grants has not changed since DOD began awarding them in 1999. Table 4  contains additional information about these initiatives and the size and  number of grants awarded with Breast Cancer Research stamp proceeds.
Since NIH and DOD both apply Breast Cancer Research stamp proceeds to  established grant programs the agencies used existing procedures and  regulations for awarding grants funded with the proceeds. For example,  both agencies use existing review procedures to evaluate grant  applications with input from advocacy groups. NIH and DOD officials  stated that advocacy groups play an important role, and both agencies  involve advocacy groups in their grants processes.
Grants funded by NIH and DOD using Breast Cancer Research stamp  proceeds have produced significant findings in breast cancer research. The  first NIH Exceptional Opportunities Awards funded with Breast Cancer  Research stamp proceeds were distributed in fiscal year 2003 and are  awarded for a maximum of 4 years; therefore, it is still too early to report  results from these awards. Both NIH and DOD use existing programs and  processes such as monitoring grantees and requiring annual grantee  reporting, which has made measuring grant performance and tracking  grant outcomes relatively straightforward. Officials at each agency were  pleased to gain new sources of funding and pleased that there have been  some significant findings in the field of breast cancer research resulting  from these awards. Table 5 provides select examples of research findings  from NIH Insight Awards and DOD Idea Awards funded with Breast Cancer  Research stamp proceeds.
HHS began receiving Stop Family Violence stamp proceeds from the  Service in May 2004, and, as of July 2005, HHS has not yet awarded any  grants using semipostal proceeds. HHS is using an established grant  program, the Family Violence and Prevention Services Program, to make  the proceeds available at the end of fiscal year 2005 for grants aimed at  enhancing services to children exposed to domestic violence. As of June  30, 2005, the Service had transferred about $1.8 million to HHS, and the  agency has directed these proceeds to ACF, which is responsible for  distributing the funds. In June 2005, ACF released an announcement for the  grants, and ACF officials stated that they expect the first grants to be  awarded during the end of fiscal year 2005. The purpose of the grants is to  provide enhanced services and support to children who have been exposed  to domestic violence in order to mitigate the impact of such exposure and  increase the opportunities for these children to lead healthy lives as adults.  Grant applicants are required to collaborate with a state’s domestic  violence coalition and the state agency responsible for administering family  violence programs. According to agency officials, it has always been ACF’s  intention to use Stop Family Violence proceeds for enhanced services to  children. Table 6 provides additional information about the ACF grants, to  be awared including the size and number of awards.
According to ACF officials, the agency used an established program to  develop its grants to award Stop Family Violence stamp proceeds. The  officials stated that ACF is using existing competitive review procedures to  evaluate grant applications. These review procedures are described in the  grant announcement, which was developed through ACF’s existing grant  application process and made available on ACF’s Web site. ACF also plans  to use its existing project grant reporting system to monitor grantee  performance (see table 6). ACF consulted with domestic violence advocacy  groups, state agencies, and state domestic violence coalitions on the  current distribution of children’s services offered by domestic violence  organizations and solicited their input on a fair and equitable method for  grant participation. Although ACF involved advocacy groups in developing  the way that semipostal funds could be used initially, many groups that we  spoke with in the spring of 2005 expressed concern about how the Stop  Family Violence stamp proceeds would be spent. Some national domestic  violence groups reported that they were unaware of ACF’s intentions for  semipostal proceeds because no semipostal grants have been announced  and no funds had been spent.
section_title: FEMA: New Program Being Developed to Distribute Heroes of 2001 Stamp Proceeds
paragraphs: FEMA started receiving Heroes of 2001 stamp proceeds from the Service in  November 2002, and FEMA has not yet distributed any of the semipostal  proceeds. To determine the total amount of funds available, FEMA officials  stated that the agency made a decision to wait until the Service had  transferred all semipostal proceeds—in May 2005—before finalizing its  grants program. Following the final transfer, FEMA had received over $10.5  million in semipostal proceeds. FEMA is establishing a program to make  grants available to eligible emergency relief personnel who are  permanently disabled or to the families of emergency relief personnel who  were killed as a result of the terrorist attacks of September 11. According  to FEMA officials, while distributing funds to disaster victims is within the  scope of FEMA’s mission, distributing the semipostal proceeds is not within  the scope of its disaster authority. As a result, FEMA has had to establish a  new program with new regulations for semipostal proceeds, which  includes establishing the mechanism through which the funds would be  distributed. After undergoing regulatory review at the Office of  Management and Budget (OMB), FEMA’s interim rule for their assistance  program under the 9/11 Heroes Stamp Act of 2001 was made publicly available on July 26, 2005. The interim rule states that FEMA intends to  distribute all Heroes of 2001 stamp proceeds equally among all eligible  claimants. Table 7 provides additional information about the FEMA grants.
When designing its program and regulations, FEMA officials stated that the  agency considered the findings resulting from the Department of Justice  September 11th Victim Compensation Fund of 2001, which provided over $7 billion in compensation to victims of the terrorist attacks. One of the  observations detailed in the Final Report of the Special Master for the  September 11th Victim Compensation Fund of 2001 is that there are  serious problems posed by a statutory approach mandating individualized  awards for each eligible claimant and that a better approach might be to  provide the same amount for all eligible claimants. Prior to publicizing its  interim rule, FEMA had informal discussions with stakeholder groups, and  FEMA officials also stated that the program regulation would be available  for public comment. New York City police, firefighter, and representatives  of victims’ foundations whom we spoke with expressed some concern  regarding FEMA’s use of the proceeds, because they were unaware if FEMA  planned to allocate the Heroes of 2001 stamp proceeds through assistance  programs or grants to individual families. These groups also noted that  since the September 11 terrorist attacks, there has been an evolving set of  needs that have little funding support, including long-term programs such  as counseling and health care for emergency relief personnel involved in  the September 11 recovery and clean-up efforts.
section_title: Agencies Have Not Reported Specifically on the Proceeds’ Use
paragraphs: None of the designated federal agencies receiving semipostal proceeds is  required to issue a report to Congress detailing how these funds are used or  any accomplishments resulting from semipostal-funded grants. The  agencies would face such a reporting requirement if the three existing  semipostals had been authorized under the Semipostal Authorization Act.  Specifically, the act contains an accountability mechanism consisting of  annual reports to include (1) the total amount of funding received by the  agency, (2) an accounting of how proceeds were allocated or otherwise  used, and (3) a description of any significant advances or accomplishments  during the year that were funded—in whole or in part—with funds  received. However, the laws that created the three semipostals did not  specify any reporting requirements, and the agencies themselves have  decided to take varying actions in this regard.
NIH and DOD do not report specifically on the use of semipostal  proceeds, though the agencies do collect information that, if necessary,  could be assembled for such a report. To help manage their respective  grant programs, NIH and DOD require award recipients to provide  periodic reports on research progress and any breakthroughs achieved.  Research findings from grants funded by Breast Cancer Research stamp  proceeds can be found in some NIH publications, but the agency does  not report specifically on its use of these funds. DOD provides limited  information on its Idea Awards through annual reports on its  Congressionally Directed Medical Research Programs. This reporting is  limited to the number of Idea Awards and does not provide information  on which awards are funded with Breast Cancer Research stamp  proceeds.
ACF plans to monitor grantee performance and to report on its use of  semipostal proceeds through HHS’ grants system and will make an  additional report available to Congress.
Although FEMA initially indicated to us that the agency was not  required to report on its use of semipostal proceeds, FEMA recently  provided information to Congress—in part as a result of our work—on  the total proceeds received from the sales of the Heroes of 2001 stamp.  FEMA officials have indicated that once proceeds have been distributed,  a report will be provided to Congress on the status of the 9/11 Heroes  Stamp Act of 2001. According to FEMA officials, the report will  summarize the agency’s Heroes of 2001 stamp program including  information on its development, the process undertaken, and who is  receiving the semipostal proceeds.
Various fund-raising organizations that we spoke with indicated that  program reporting is a useful accountability tool and may lead to greater  fund-raising success. For example, the BBB Wise Giving Alliance, a charity  watchdog group, recommends reporting requirements, in the form of  annual reports, for charitable organizations to ensure that representations  to the public are accurate, complete, and respectful. These reports should  be made available to all, on request, and should include the organization’s  mission, a summary of the past year’s accomplishments, and financial  information. Further, officials with the American Red Cross stated that  disclosure provides transparency, allowing consumers to determine if the  cause is the best use of their money, and Association of Fundraising  Professional officials noted that such reporting can even secure additional  support by encouraging more people to contribute to the effort.
section_title: Lessons Learned from Existing Semipostals
paragraphs: While many of the agency officials, fund-raising groups, and charitable  organizations that we contacted believe that the semipostals have been  good fund-raisers, nearly all of them also believe that there were lessons  learned. For the past several years, there have been multiple proposals  introduced in Congress to establish new semipostals. For example in the  108th Congress, proposals had been introduced for semipostals promoting  childhood literacy, the Peace Corps, and prevention of childhood drinking.  Each of these proposals expired in committee, and—so far—the Peace  Corps semipostal proposal has been reintroduced in the 109th Congress.  Any lessons learned from the existing semipostals may be especially  relevant for any future semipostals, whether congressionally mandated or  issued under the Service’s authority. The lessons we identified from these  three semipostals related primarily to five areas:  use of funds raised, and  agency reporting.
subsections: section_title: Lesson Learned: The Charitable Cause Selected Can Greatly Affect the Arc of the Fund-Raising Effort and Other Results Achieved
paragraphs: The existing semipostals have been issued for a minimum 2-year sales  period, and one—the Breast Cancer Research stamp—has been extended 3  times. The experience with the three existing semipostals indicates that the  particular nature of the charitable causes may be important in how much  money is raised, how long consumers continue to purchase the semipostal,  and other results achieved. Among these differences are the following:  One-time charitable causes, such as response to a major disaster, may  provide a substantial immediate response but may also have limited  staying power as ongoing fund-raisers. The Heroes of 2001 stamp was  issued in 2002, while various national organizations were still raising  funds for victims of the families of emergency relief personnel killed or  disabled in the line of duty. Sales were highest for the initial two- quarters, followed by a dramatic drop. By contrast, the Breast Cancer  Research stamp, which raises funds for an ongoing health issue, has had  sales that have remained at a high level over its entire sales period.
Considering a cause’s appeal in drawing affinity support is important in  setting fund-raising expectations. Some charitable causes are simply  less popular than others, and recognition of these differences can aid in  forming assumptions about how much money will be raised through  semipostal sales. For some consumers, applying a postage stamp serves  as a symbol of loyalty to a particular charitable cause; therefore, it can  be anticipated that the magnitude of a particular cause’s base of support  will be reflected in semipostal sales. Association of Fundraising  Professionals officials noted that certain causes generate a greater  response than others, regardless of fund-raising methods. That is, breast  cancer is a pervasive and ongoing concern; the September 11 terrorist  attacks were a popular concern, but also an event likely to fade in  intensity over time; and family violence, while an ongoing concern, is  likely to engender less appeal. According to Association of Fundraising  Professionals officials, the amounts raised by each semipostal are  consistent with the popularity of the type of fund-raising cause  represented on the stamps.
In some cases, a growth in cause awareness may be a success that  transcends the amount of money raised. In addition to raising funds, the  semipostal program provides an avenue for increased exposure for  particular charitable causes. While the amount of funds raised may not  be as high for some causes, there are additional benefits of having a  semipostal representing a particular cause visible and for sale in post  offices throughout the country. Organizations and individuals whom we  spoke with agreed that for all of the semipostals, heightened awareness  of the cause was one benefit of having a semipostal. One Breast Cancer  Research stamp supporter commented that the contribution that the  semipostal has made to breast cancer awareness is priceless and more  precious than the funds raised. Likewise an official from the National  Fallen Firefighters Foundation stated that the Heroes of 2001 stamp has  helped raise public awareness about the fire service.
section_title: Lesson Learned: Early and Continued Involvement of Advocacy Groups Helps to Sustain Semipostal Support
paragraphs: Support of advocacy groups is an important marketing device for  semipostals. American Red Cross and BBB Wise Giving Alliance officials  told us that advocacy groups are the most useful tool for getting the word  out about charitable causes and fund-raising efforts, and Service officials  agreed. Broad supportive networks of private organizations that are willing  and capable of assisting in local and national marketing help sustain  semipostal awareness and sales. Where it is not possible to do aggressive  private-sector style marketing, as is the case with semipostals, advocacy  groups can fill this gap. In the case of the Breast Cancer Research stamp,  for example, the Service no longer has a budget to advertise stamps, which  includes semipostals, but there are numerous advocacy groups that  publicize the Breast Cancer Research stamp on their Web sites, at events  they sponsor, and through letters to members and legislators.
To sustain support from advocacy groups, the Service must cultivate this  support, and the agency receiving the semipostal proceeds must sustain  this support. Organizations involved with charitable causes told us that due  to their multitude of priorities, if their input and support are not solicited  and they are not kept informed about issues related to the relevant  semipostal, including fund usage and program outcomes, group support for  the semipostal will wane. For example, several advocacy groups associated  with the domestic violence cause told us that immediately following launch  of the Stop Family Violence stamp there was uncertainty as to how HHS  was going to use the proceeds because the public announcement at the  stamp’s kickoff event differed from the groups’ expectations. These  advocacy groups told us that as a result of this confusion, they did not  aggressively promote the semipostal.
section_title: Lesson Learned: The Stamp Design, How Extensively It Is Promoted and Information About the Use of Proceeds Can Greatly Affect the Extent to Which Consumers Support the Semipostal
paragraphs: Semipostal design is one of the variables that can affect whether  consumers are willing to signal their support for a cause. We received  comments from numerous stakeholders, for example, that the design of the  Stop Family Violence stamp, while certainly drawing attention, may not  create a positive response—or affinity—because of its tone. A semipostal’s  design can evoke emotion, and the emotional reaction to the image may be  important in a consumer’s decision to purchase a semipostal and use it on a  letter to make a statement. For example, the Heroes of 2001 stamp  provided an image that was not only recognizable but inspiring. By  contrast, the image on the Stop Family Violence stamp may create a more  complex reaction, and result in a consumer’s decision not to buy the  semipostal.
The extent of promotion and advertising of a semipostal can also greatly  affect sales. Fund-raising organizations that we spoke with agreed that in  most cases, there is a connection between the amount invested in a fund- raising effort and the amounts raised. Although a direct correlation has not  been determined, it should be noted that as a result of a Service budget  reduction, which eliminated stamp advertising, the Stop Family Violence  stamp did not benefit from a million-dollar promotional campaign as the  two other semipostals did, and sales have remained lower in comparison  for the stamp.
Support may be further enhanced if the semipostal or the available  marketing information clearly indicates how the proceeds will be used.  Transparency is critical to fund-raising efforts, and semipostals are no  exception. According to the BBB Wise Giving Alliance, one of the standards  for charity accountability is to clearly disclose how the charity benefits  from the sale of product or services. American Red Cross officials also  emphasized that providing this information to consumers is critical to fund- raising efforts like semipostals. We found widespread confusion among  advocacy groups about specifically how the Stop Family Violence stamp  proceeds would be used. Officials added that the disclosure of where  funding is to be directed is particularly important, given that consumers are  increasingly savvy, and people have become increasingly skeptical about  the distribution of charitable funds.
section_title: Lesson Learned: Semipostals Generate Revenues Immediately Upon Issuance, but the Logistics of Using the Moneys Raised Takes Longer
paragraphs: The time lag between when funds are first raised and when they are  distributed can be considerable, depending on the type of program that the  agency implements for distributing semipostal proceeds. Semipostal sales  generate revenues immediately upon going on sale at post offices, and  semipostal revenues are distributed by the Service to designated agencies  biannually, after the Service’s reasonable costs are deducted. However, it  can then take an additional 2 years, or longer, for the funds to be used. For  example, the Breast Cancer Research stamp, which was authorized in  August 1997, was first sold in July of 1998, and the initial grants resulting  from the proceeds were awarded by DOD in June of 1999 and by NIH in  June of 2000 (nearly 1 and 2 years after issuance); the Heroes of 2001 stamp  was first sold in June of 2002, and the proceeds raised have not yet been  awarded by FEMA (3 years after the stamp was issued); and the Stop  Family Violence stamp was first available in October of 2003, and no funds  have yet been awarded by ACF (nearly 2 years after issuance).
When semipostals are used as a fund-raising vehicle, the time lag is a  consideration. Agencies awarding semipostal proceeds may need to  consider this time lag in deciding how to apply the funds, particularly for  episodic events that may involve a fund-raising surge and short-term or  evolving needs. For example, program and funding priorities may change  from the time that a semipostal is launched to the time proceeds are  actually distributed. This time lag can result in consumer skepticism of or  disagreement with the original program selection, resulting from changing  or new funding priorities. For example, FEMA’s plan for distributing the  Heroes of 2001 stamp proceeds has taken about 3 years to finalize, and  while it is clear that the initial intent of the semipostal was to “provide  financial assistance to the families of emergency relief personnel killed or  permanently disabled in the terrorist attacks of September 11,” other  organizations working with these families suggested that currently, the  most prevalent needs of this group are programs and services directed at  addressing the long-term effects of the terrorist attacks.
The amounts raised by semipostals vary, and it is difficult to determine how  much money will be raised by semipostal sales. For example, FEMA and  ACF, which receive proceeds from the Heroes of 2001 and Stop Family  Violence stamps respectively, reported to us that they delayed spending in  these programs due to the uncertainty of how much money would be  raised. ACF officials told us they initially expected the Stop Family  Violence stamp to raise considerably more than it has. Once ACF officials  realized that the amounts raised may not be sufficient to cover the planned  programs, officials revisited their plans for the proceeds. Further, FEMA  waited until all semipostal proceeds were received from the Service before  pursuing its grant program. Due to the uncertainties surrounding how  much money will be raised by semipostals, establishing a program that will  be funded solely by semipostal proceeds may present challenges. In  addition, attaching funds to already established mechanisms, such as  existing grant guidelines or programs, may ease administration and allow  for additional flexibility. For example, both the Breast Cancer Research  and Stop Family Violence stamp proceeds are being used to distribute new  grants within existing programs, which has allowed the agencies to make  grants available using semipostal proceeds without developing and  establishing the rules and regulations for new programs.
section_title: Lesson Learned: A Reporting Approach, Such as the One Included in the Semipostal Authorization Act, Can Enhance Accountability
paragraphs: Program reporting is an important standard for ensuring accountability. In  general, we found that organizations we spoke with were unclear as to how  semipostal proceeds were being used or would be used, and we found that  none knew of any outcomes resulting from these funds. The Semipostal  Authorization Act, which does not specifically apply to these three existing  semipostals, requires that the agencies receiving funds under the act report  to the congressional committees with jurisdiction over the Service about  the semipostal funds received and used. Fund-raising organizations we  spoke with, including the American Red Cross and the BBB Wise Giving  Alliance, also recommend such reporting, pointing to the need to inform  consumers about how proceeds have been used. Additionally, annual  reporting may make information about program goals, plans, or funding  mechanisms available to Congress, advocacy groups, and others earlier,  thereby addressing some of the uncertainty that may arise between the  initial issuance of the semipostal and the actual distribution of funds.  Currently, none of the agencies administering the three semipostals are  providing this degree of disclosure for semipostal programs. Agency  reporting for these semipostals is either subsumed in reports about the  larger programs to which the proceeds are applied or has not yet been  produced. However, these agencies do collect and track this information  and could report it with little difficulty.
section_title: Conclusion
paragraphs: We found widespread agreement among most parties involved that the  Breast Cancer Research, Heroes of 2001, and Stop Family Violence stamps  were a success. Success can be measured in terms of funds raised, but also  in less tangible ways, such as increased public awareness of an important  issue. If the definition of semipostals success is narrowed specifically to  the funds raised, however, the differences among these three make it all the  more important to pay attention to the lessons learned, which can help in  setting expectations for further semipostal sales.
Given that new semipostals have been proposed in Congress and the  Service is authorized to issue additional semipostals, the potential is  always there for new semipostals, and therefore the lessons learned may be  helpful in any future considerations. One of these lessons—the need for  accountability—involves actions that can still be taken on these  semipostals, rather than just applied to future semipostals. Through the  Semipostal Act and its related regulations, Congress and the Service have  taken measures to develop criteria for the selection of semipostal issues,  identification of recipient agencies, and reporting of program operations,  but these criteria have thus far been largely bypassed due to the provisions  that have authorized these three semipostals. These three semipostals lie  outside the Semipostal Authorization Act, and may benefit from applying  the reporting requirement. Additionally, if any future semipostals are  authorized by Congress separately from this act, this type of requirement  could be included as part of the legislation in order to ensure greater  accountability and greater support for the semipostals.
section_title: Recommendation for Executive Action
paragraphs: To enhance accountability for semipostal proceeds, we recommend that  the Secretary of Defense, Secretary of Homeland Security, and Secretary of  Health and Human Services annually issue reports to the congressional  committees with jurisdiction over the Service, as is currently required for  agencies that are to receive semipostal proceeds under the Semipostal  Authorization Act. Reports should include information on the amount of  funding received, accounting for how the funds were allocated or  otherwise used, and any significant advances or accomplishments that  were funded, in whole or in part, out of the funds received through the  semipostal program.
section_title: Agency Comments and Our Evaluation
paragraphs: We requested comments on a draft of this report from the Service, ACF,  DOD, FEMA, HHS, and NIH. The Service and DOD provided written  comments, which are summarized below and reprinted in appendix VI and  VII, respectively. ACF, FEMA, HHS, and NIH did not provide comments on  this report.
The Service stated in its comments on the draft report that it generally  agreed with the four key factors that we cited as affecting stamp sales. The  Service agreed that the fund-raising cause and support of advocacy groups  were key factors in the stamps’ success. However, the Service suggested  that stamp design and its promotion of the stamps seem to be of less  importance to a semipostal stamp’s success as a fund-raiser. The Service  said that its experience indicates that a semipostal’s design plays little role  in its effectiveness as a fund-raiser. We based our conclusion, that stamp  design affects the extent to which consumers support the semipostal, on  our discussions with advocacy groups and fund-raising experts who  expressed concern that the design of the Stop Family Violence stamp—an  image of a crying child—may have negatively affected the sales of that  semipostal. Therefore, we continue to believe that the design was a factor  in the stamp’s sales.
Regarding promotional activities for specific semipostals, the Service  correctly noted that its current policy requires that promotional costs be  deducted from the funds raised, which can lead to the federal agencies  receiving less semipostal proceeds. We acknowledge that HHS chose not to  have the Service develop an extensive advertising campaign after the  Service changed its policy on semipostal promotional costs, and our  finding is not meant as a criticism of the Service. Nevertheless, the striking  differences in results leads us to conclude that the Service’s promotional  efforts can make a difference: the Service spent about $1 million to  promote the Breast Cancer Research stamp, which raised $44 million in 7 years; it spent about $1 million to promote the Heroes of 2001 stamp,  which raised over $10.5 million in 2.5 years; and it spent about $77,000 to  promote the Stop Family Violence stamp, which has raised nearly  $2 million in 1.6 years. Our conclusion was reinforced by the fund-raising  experts that we spoke with who agreed that in most cases there is a  connection between the amount invested in a fund-raising effort and the  amounts raised.
DOD concurred with our recommendation to improve reporting of how  semipostal proceeds are used. DOD explained that the Army will include in  its annual report to Congress on “Congressionally Directed Medical  Research Programs” a section on DOD’s use of Breast Cancer Research  stamp proceeds. It noted that this report will highlight significant advances  or accomplishments that were funded, in whole or in part, through these  proceeds.
We are sending copies of this report to Senators Dianne Feinstein and Kay  Bailey Hutchison and Representative Joe Baca because of their interest in  the Breast Cancer Research stamp; Senators Hillary Rodham Clinton and  Charles E. Schumer because of their interest in the Heroes of 2001 stamp;  the Postmaster General; the Chairman of the Postal Rate Commission; and  other interested parties. We will make copies available to others upon  request. This report will also be available on our Web site at no charge at  http://www.gao.gov.
If you have any question about this report, please contact me at (202) 512-2834 or at siggerudk@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Key contributors to this report included Gerald P. Barnes,  Assistant Director; Kathleen Gilhooly; Molly Laster; Heather MacLeod;  Joshua Margraf; Stan Stenersen; and Gregory Wilmoth.
section_title: Scope and Methodology
paragraphs: To determine the amount of money raised by the semipostals, we analyzed  semipostal sales data provided to us by the U.S. Postal Service (Service).  For each semipostal, these data included the amount of quarterly stamp  sales and the amount of proceeds transferred to the designated federal  agencies. The data also included administrative costs deducted by the  Service from the total sales amounts, which we have reported in appendix  II. To determine the reliability of the data we received, we obtained and  reviewed specific information on the Service’s data collection methods,  including data storage and system controls. We determined that the data  were sufficiently reliable for the purpose of this report.
To identify potential factors affecting the patterns of fund-raising sales for  each of the semipostals, we asked stakeholders for their opinions regarding  such factors and identified common trends. As part of this effort, we spoke  with Service officials; the American Philatelic Society; professional fund- raising organizations; and national advocacy groups affiliated with breast  cancer, emergency relief personnel affected by the terrorist attacks of  September 11, and domestic violence. We also spoke with Dr. Ernie Bodai,  who is credited with conceiving the idea for the Breast Cancer Research  stamp, and Ms. Betsy Mullen, who along with Dr. Bodai lobbied Congress  for the stamp. Additionally, we gathered information about Service and  advocacy group efforts to promote each of the semipostals. Table 8  identifies the stakeholders whom we spoke with.
To determine how the designated federal agencies have used semipostal  proceeds and reported results, we interviewed key officials from each  agency receiving funds. These agencies included the National Cancer  Institute (NCI) within the National Institutes of Health (NIH), the Army  Medical Research and Materiel Command within the Department of  Defense (DOD), the Federal Emergency Management Agency within the  Department of Homeland Security, and the Administration for Children and  Families within the Department of Health and Human Services. We also  obtained and reviewed available agency documentation about grant  programs funded with semipostal proceeds, including grant program  development, purpose and goals, award and program guidelines, the  number and amounts of awards, reporting requirements, performance  measures, and grant outcomes. We did not assess each agency’s semipostal  grant program as this was not included in the scope of our work, nor did we  evaluate grant performance measures that might be included in agency  reporting.
Finally, to describe the monetary and other resources expended by the  Service in operating and administering the semipostal program, we  obtained and analyzed the Service’s data on costs of administering  semipostals as well as what costs the Service has recovered. We also  interviewed officials in the Service’s Offices of Stamp Services and Finance  to determine what progress the Service has made in revising its regulations.  We spoke with officials from the Service’s Legal Counsel to determine  whether the Service has established baseline costs for the semipostal  program as per our prior recommendation.
section_title: Postal Service Semipostal Costs and Semipostal Cost Recovery Regulation Changes
paragraphs: The Service has incurred over $16.5 million on operating and administering  the Breast Cancer Research, Heroes of 2001, and Stop Family Violence  stamps. Of this amount, the Service has recovered about $1.8 million from  semipostal proceeds, with the remainder recovered through the First-Class  postage rate. The Service’s costs related to the Breast Cancer Research  stamp have by far eclipsed costs of the other two semipostals, reflecting  the amount of time that the stamp has been offered for sale and other  factors. In our previous work, we expressed concern over the Service’s cost  recovery regulations. Since our 2003 report, the Service has taken several  steps to revise its cost recovery regulations, and has established baseline  costs to identify and recover the Service’s reasonable costs related to the  semipostals.
subsections: section_title: Monetary Resources Devoted to the Semipostals
paragraphs: According to Service policy, cost items recoverable from the funds raised  by semipostals include, but are not limited to, packaging costs in excess of  those for comparable stamps, printing costs for flyers or special receipts,  costs of changes to equipment, costs of developing and executing  marketing and promotional plans in excess of those for comparable  stamps, and other costs that would not normally have been incurred for  comparable stamps. Specifically, the Service has identified 13 cost  categories that it uses to track semipostal costs. These categories include  the following:  stamp production and printing;  withdrawing stamps from sale;  destroying unsold stamps;  printing flyers and special receipts;  developing and executing marketing and promotional plans; and  other costs (legal, market research, and consulting).
Costs reported by the Service totaled $16.5 million through March 31, 2005  (see table 9). Costs for the Breast Cancer Research stamp accounted for  more than $11 million of this amount. The Service determined that about  $1.8 million of the total costs related to the three stamps represented costs  that were attributable specifically to the semipostals and would not  normally have been incurred for comparable stamps, and therefore needed  to be recovered. The recovered amounts ranged from over $1 million for  the Breast Cancer Research stamp, to just over $200,000 for the Stop  Family Violence stamp. The Service reported that the majority of costs  incurred by the semipostals were covered by the First-Class postage rate,  and not recovered from the proceeds. Table 9 describes the semipostal  costs incurred and recovered by the Service.
The specific costs recovered from surcharge revenues varied by semipostal  not only in amount, but to a degree, in the type of expenditure as well (see tables 10 to 12, which show costs for each semipostal). For example, when  the Breast Cancer Research and Heroes of 2001 stamps were issued, the  Service had a budget to advertise stamps. Both semipostals incurred  advertising costs of about $1 million, and because advertising costs would  be incurred for comparable stamps, the Service did not recover those costs.  When the Stop Family Violence stamp was issued, the Service reduced its  overall budget and eliminated, among other things, all stamp advertising,  including that for semipostals. Subsequently, the Service established a  policy that all costs incurred for advertising semipostals would be  deducted from the applicable semipostal’s surcharge revenue. Therefore,  the advertising costs incurred ($77,000) for this semipostal were recovered  from the surcharge revenue. While policies changed for some cost  categories, they remained consistent for others such as design and  production and printing.
section_title: Progress in Revising Regulations Related to Costs
paragraphs: In our September 2003 report on the Breast Cancer Research stamp, we  recommended that the Service reexamine and, as necessary revise its cost- recovery regulations to ensure that the Service establishes baseline costs  for comparable stamps and uses these baselines to identify and recover  costs from the Breast Cancer Research stamp’s surcharge revenue. The  Service has taken several steps to revise its regulations including the  following: 1. The final rule in 39 C.F.R. §551.8, in effect since February 5, 2004,  clarifies Service cost offset policies and procedures for the semipostal  program. Specific changes include  expanding the types of “comparable stamps” that could be used in  conducting cost comparisons to allow other types of stamps (such as  definitive or special issue stamps) to serve as a baseline for cost  comparisons;  allowing for the use of different comparable stamps for specific cost   clarifying that costs that do not need to be tracked include not only  costs that are too burdensome to track, but also those costs that are  too burdensome to estimate; and  clarifying that several types of costs could be recovered when they  materially exceed the costs of comparable stamps. 2. The Service also amended the regulation 39 C.F.R. §551.8(e) effective  February 9, 2005, to delete the word “may” from the cost items  recoverable from the surcharge revenue, making the recovery of the  costs listed mandatory rather than optional.
Additionally, we have recommended that the Service establish and publish  baseline costs to provide assurance that the Service is recovering all  reasonable costs of the Breast Cancer Research stamp from the surcharge  revenue. In response, on June 25, 2004, the Service provided a copy of its  baseline analysis to both Congress and GAO in a report entitled United  States Postal Service: Response to the General Accounting Office  Recommendations on the Breast Cancer Research Stamp. In this analysis,  the Office of Stamp Services and Office of Accounting identified  comparable stamps and created a profile of the typical costs  characteristics, thereby establishing a baseline for Breast Cancer Research  stamp cost recovery. Additionally, Service officials reported that they  would use the baseline for the other semipostals.
section_title: Semipostal Design
paragraphs: Congress has selected the subject matter for the three semipostals issued  to date. In each case, the Service has then applied the same design process  used for regular commemorative stamps. According to Service officials,  most subjects that appear on commemorative stamps are the result of  suggestions sent in by the public, which number about 50,000 annually. In  the case of commemorative stamps, the Postmaster General determines  what stamps will be produced with the assistance of the Citizens’ Stamp  Advisory Committee (CSAC), which works on behalf of the Postmaster  General to evaluate the merits of all stamp proposals and selects artwork  that best represents the subject matter. Since the three existing semipostals  were mandated by Congress, the Service and CSAC were not involved in  selecting the subject matter. However, the rest of the stamp design process  was the same, with CSAC determining what design would be used, and the  Postmaster General giving final approval. Figure 8 shows the three  semipostals.
subsections: section_title: Breast Cancer Research Stamp
paragraphs: The Breast Cancer Research stamp was designed by Ethel Kessler of  Bethesda, MD, and features the phrases "Fund the Fight" and "Find a Cure."  Whitney Sherman of Baltimore provided the illustration of Diana, mythical  goddess of the hunt, who is reaching behind her head to pull an arrow from  her quiver to fend off an enemy—in this case, breast cancer. This image  reflects the same position that a woman assumes for a breast self  examination and mammography. The various colors represent the diversity  of Americans affected by breast cancer.
section_title: Heroes of 2001 Stamp
paragraphs: The Heroes of 2001 stamp was designed by Derry Noyes of Washington,  D.C., and features a detail of a photograph by Thomas E. Franklin. The  photograph shows three firefighters, each of whom participated in the  September 11 rescue efforts, raising the U.S. flag in the ruins of the World  Trade Center at Ground Zero in New York. The flag had been discovered in  a boat near the area and was raised on a pole found in the rubble. The  space between the foreground and background of the picture, which was  about 100 yards, helps convey the enormity of the debris and the task at  hand. According to the photographer, the raising of the flag symbolizes the  strength of the firefighters and of the American people battling the  unimaginable. All three firefighters and the photographer attended the  stamp’s unveiling ceremony, which marked the 6-month anniversary of the  September 11 terrorist attacks.
Stop Family Violence Stamp When art director Carl T. Herrman selected Monique Blais, a six-year-old  from Santa Barbara, CA, to model for a photograph that was to be the  original design of the Stop Family Violence stamp, his intention was to  photograph Blais erasing a domestic violence image from a chalkboard— symbolizing eradication of the issue. During a break in the photo session,  however, and without prompting, Blais began drawing her own picture of  what she thought best represented domestic violence. Photographed by  Philip Channing, Blais’s drawing became the basis for the final Stop Family  Violence stamp design, which was later selected by a jury at the 34th Asiago  International Prize for Philatelic Art, in Asiago, Italy as the most beautiful  social awareness-themed stamp issued during 2003. The young artist  attended the stamp’s unveiling ceremony at the White House in 2003.
section_title: NIH Breast Cancer Research Awards Funded with Breast Cancer Research Stamp Proceeds
paragraphs: As of April 2005, NIH had awarded 106 breast cancer research grants  totaling about $16.1 million using proceeds from the Breast Cancer  Research stamp. Individual awards ranged from $47,250 to $616,010 and  averaged about $151,652. Funds received from sales of the Breast Cancer  Research stamp were initially used to fund breast cancer research under  NCI’s “Insight Awards to Stamp Out Breast Cancer” initiative, according to  NIH officials. In 2003, NCI’s Executive Committee decided to direct the  funds to a newly approved Breast Cancer Research stamp initiative entitled  “Exceptional Opportunities in Breast Cancer Research.” Grants awarded  under each program are listed below.
subsections: section_title: Insight Awards
paragraphs: The Insight Awards were designed to fund high-risk exploration by  scientists who are employed outside the federal government and who  conduct breast cancer research at their institutions. NCI distributed 86  Insight Awards at a total of about $9.5 million. Most of the awards were for  2-year periods. Individual awards ranged from $47,250 to $142,500 and  averaged $111,242, discounting a one-time supplement of $4,300. Table 13  provides information about each Insight Award funded with Breast Cancer  Research stamp proceeds, including the fiscal year of the award,  sponsoring institution, principal investigator, research area, and the  amount of the award.
section_title: Exceptional Opportunity Awards
paragraphs: The Exceptional Opportunities were designed to advance breast cancer  research by funding high-quality, peer-reviewed, breast cancer grant  applications that are outside the current funding ability of NCI. When NIH  began awarding these grants, the number of annual awards decreased from  about 29 per year to 10, while the average amount tripled. In all, NCI  dispersed Breast Cancer Research stamp proceeds to 20 Exceptional  Opportunities awards, each funded for a maximum of 4 years. The awards  totaled about $6.6 million and covered research areas that included  prevention, diagnosis, biology, and treatment. Individual awards ranged  from $81,000 to $616,010 and averaged $330,763. Table 14 provides  information about each Exceptional Opportunities Award, including the  fiscal year of the award, sponsoring institution, principal investigator,  research area, and the amount of the award.
section_title: DOD Breast Cancer Research Awards Funded with Breast Cancer Research Stamp Proceeds
paragraphs: As of April 2005, DOD had awarded 27 breast cancer research grants  totaling about $11 million using proceeds from the Breast Cancer Research  stamp. Individual awards ranged from $5,000 to $767,171 and averaged  $400,405. DOD applies Breast Cancer Research stamp proceeds to its  Breast Cancer Research Program in order to fund Idea Awards, which are  grants that focus on innovative approaches to breast cancer research and  cover research areas such as genetics, biology, imaging, epidemiology,  immunology, and therapy. According to DOD officials, about $500,000 of  the transferred funds had been used for overhead costs. Table 15 provides  information about each Idea Award funded with Breast Cancer Research  stamp proceeds, including the fiscal year of the award, sponsoring  institution, principal investigator, research area, and the amount of the  award.
section_title: Comments from the U.S. Postal Service
section_title: Appendix VII