U.S. Postal Service: Agencies Distribute Fund-raising Stamp Proceeds and Improve Reporting
Released: 2007-10-30T00:00:00

Letter

Background

To date, three stamps have been issued in the nation’s semipostal program: the Breast Cancer Research, Heroes of 2001, and Stop Family Violence stamps. Semipostals are stamps sold at a premium above the First-Class postage rate; the net premium amount supports a designated cause. The semipostal proceeds are transferred from the Service to the designated federal agencies. The three semipostals were authorized through separate congressional acts relating to each stamp. The Stamp Out Breast Cancer Act required that the Service issue the Breast Cancer Research stamp. 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, respectively. Figure 2 illustrates the three semipostals.

The sales period for the three semipostals has varied. Initially, the Breast Cancer Research stamp was authorized for 2 years in 1998. Since then, it has been reauthorized four times and there are currently proposals in Congress to further extend the sales period for either two or four additional years beyond the current expiration date of December 31, 2007. The Breast Cancer Research stamp raises money for breast cancer research programs supported by NIH and DOD, with NIH receiving 70 percent of the funds available and DOD 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 assist 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 Stop Family Violence stamp was offered for sale from October 8, 2003, to December 31, 2006. Proceeds from the Stop Family Violence stamp were transferred to ACF for domestic violence prevention programs. Between October 8, 2003, and December 31, 2004—a period of just over 1 year—the three semipostals were on sale simultaneously. Currently, however, the Breast Cancer Research stamp is the only semipostal still being sold.

Previously, 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 a survey we conducted in 2003, members of the public viewed the stamp as an appropriate way to raise funds for a nonpostal purpose. With 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. The Service implemented our recommendation by revising its regulations. We also suggested that Congress consider establishing annual reporting requirements for NIH and DOD. In addition, we recommended that the Secretaries of Defense, Homeland Security, and Health and Human Services annually issue reports to the Congressional committees with jurisdiction over the Service and that these reports, among other things, should include information on the amount of funding received from semipostal sales and accounting for how the funds were allocated or otherwise used.

Semipostals Have Collectively Raised Over $68 Million, but the Breast Cancer Research Semipostal Has Raised the Most

As of June 30, 2007, more than $68 million has been raised through the sale of semipostals. The amounts raised and the number of stamps sold has varied among the three semipostals. Also, based on our discussions with various agencies, organizations, advocacy groups, and fund-raising experts, we identified a number of factors that affected semipostal sales, including public awareness, stamp design, and confusion about how the proceeds will be used.

Breast Cancer Research Stamp

The Breast Cancer Research stamp has raised about $54.6 million, which dwarfs the funds raised by the other semipostals. Of the funds raised, the Service transferred a total of $38.2 million and $16.4 million to NIH and DOD, respectively, for breast cancer research. Similarly, among the semipostals, the Breast Cancer Research stamp had the highest level of sales with 777.8 million stamps sold as of June 30, 2007. One explanation for the higher Breast Cancer Research stamp sales is the length of time that each stamp was sold. The Breast Cancer Research stamp—the only semipostal still on sale today—has sold for the past 9 years while the Heroes of 2001 and the Stop Family Violence stamps sold for 2.5 and just over 3 years, respectively. Although Breast Cancer Research stamp sales have fluctuated since the semipostal’s issuance in 1998, sales have been relatively high over time compared to the other semipostals (see fig. 1). For example, sales of the Breast Cancer Research stamp have averaged nearly 22 million semipostals per quarter since issuance.

Several factors affected Breast Cancer Research stamp sales to date. As we reported in 2005, public awareness about the fund-raising causes represented by the semipostals—or an issue often in the public eye— affected sales levels. For example, an official from Susan G. Komen for the Cure told us that, with one in eight women being affected by breast cancer, the subject is always in the public spotlight. Likewise, an official from the American Cancer Society told us that public awareness of breast cancer, coupled with the outreach efforts of several organizations, such as the Avon Foundation’s breast cancer fund-raising events, increased Breast Cancer Research stamp sales.

Another factor that could affect Breast Cancer Research stamp sales is the stamp’s recent price increase. In May 2007, the price of the Breast Cancer Research stamp increased from 45 cents to 55 cents. This marks the first time that this stamp’s price has increased by as much as 10 cents (see table 1). The Service’s Governors established the new price in January 2007—with knowledge that the Service had proposed an increase of the First-Class postage rate from 39 cents to 42 cents. By law, the Governors are required to set postage rates for the Breast Cancer Research stamp. The price must be an amount evenly divisible by five and at least 15 percent more than the First-Class postage rate. The Service refers to this difference in price as the differential revenue.

The Governors decided on a 10-cent price increase because the differential revenue of 34 percent, according to the Service, was historically in line with past differential revenue amounts. For example, in March 2002, when First-Class postage was 34 cents and the Breast Cancer Research stamp was 45 cents, the differential revenue was 32 percent, and this, according to Service officials, did not negatively impact Breast Cancer Research stamp sales. However, an increase to 50 cents would have yielded a differential revenue of 22 percent—also in line with past amounts (see table 1). In addition, Service officials told us that when the decision was being made as to whether the Breast Cancer Research stamp price should be 50 cents or 55 cents, the Governors agreed with postal management that 55 cents would be more appropriate. The Service believes that an increase to 55 cents would not deter customers who were passionate and supportive of the cause. With the Postal Accountability and Enhancement Act effectively allowing annual postage rate increases not to exceed the annual change in the Consumer Price Index, several years could pass with possible increases in the First-Class postage rate. Under this scenario, setting the Breast Cancer Research stamp price at 55 cents will allow for greater price stability in the event Congress further extends the stamp’s sales period beyond 2007.

With only a few months passing since this increase, we were unable to determine what impact, if any, this increase had on sales. However, fund- raising experts that we spoke with generally agreed that consumers with an affinity—or positive response—toward the Breast Cancer Research stamp would most likely continue to purchase the stamp. For example, breast cancer survivors and consumers with close family members who have battled the disease will probably continue to purchase the stamp, despite the 10-cent-price increase, to support breast cancer research. Likewise, one fund-raising expert from the BBB Wise Giving Alliance told us that, even with the 10-cent price increase, the Breast Cancer Research stamp price is still relatively low. According to this official, doubling the price, on the other hand, would probably negatively impact sales, but it is difficult to determine at which point an increase in price will negatively affect sales for any given item. Two of the three advocacy groups that we spoke with and that are affiliated with breast cancer said they could not say what impact, if any, the price increase may have on Breast Cancer Research stamp sales, while the third group believed a decline in sales would result.

Heroes of 2001 Stamp

During its sales period, a total of 132.9 million Heroes of 2001 stamps were sold. From the stamp sales, the Service transferred about $10.6 million to FEMA for distribution to the families of emergency relief personnel who were either killed or permanently disabled while serving in the line of duty in connection with the terrorist attacks of September 11, 2001. Sales of the Heroes of 2001 stamp were initially high after June 2002 when it went on sale, and over 50 percent of the stamp’s sale (see fig. 1) occurred in the two-quarters following issuance. However, shortly thereafter, sales began to decline. In our 2005 report, we attributed this decline to the stamp’s inability to maintain steady sales over time—or lack of staying power. Sales of the Heroes of 2001 stamp reflected the dramatic emotional spike typically associated with episodic events, such as a disaster, with fund- raising efforts building quickly and then declining as events begin to retreat from the public spotlight. In contrast, ongoing causes, such as finding a cure for breast cancer, are more likely to maintain staying power overtime, according to fund-raising experts. While the postage rate for the Heroes of 2001 stamp did not change during its sales period, the postage rate for a First-Class stamp did increase—also causing the differential revenue percentage to decline. Table 2 illustrates these changes.

Stop Family Violence Stamp

The Service sold 45.4 million Stop Family Violence stamps during its sales period—the lowest sales of the three semipostals. Similar to the sales patterns for the Heroes of 2001 stamp, sales for the Stop Family Violence stamp were highest during the initial two quarters following issuance (see fig. 1) and then declined. Sales fell from 6.6 million sold in the first quarter of fiscal year 2004—when the sales period began—to 2.8 million sold in the first quarter of fiscal year 2007—when the sales period ended. The Stop Family Violence stamp raised about $3.2 million, which the Service transferred to ACF to fund domestic violence prevention programs.

This review reconfirmed our previous findings regarding the factors that likely affected Stop Family Violence semipostal sales. In 2005, we reported that factors such as stamp design, confusion about how the proceeds would be used, and limited advertising were factors that likely affected sales. For this review, four of the five advocacy groups we spoke with about the Stop Family Violence stamp told us that the stamp’s design—an image of a crying child—played a key role in low stamp sales (see fig. 2). Several advocacy group officials commented that as a result, postal customers were not likely to use the stamp on wedding invitations or holiday mail. At least two officials told us that the Service should have consulted with the domestic violence community before selecting the stamp’s final design. One official told us that in so doing, the Service would have immediately learned that a different design would have been more appropriate. Another advocacy group official told us that because domestic violence is an emotionally charged issue, a softer image was needed for the stamp to have been more effective. This official suggested, for example, that a purple ribbon—often associated with domestic violence, would have been a more appropriate design.

In contrast, the Service felt that the design of the Stop Family Violence stamp was not a key factor in the stamp’s lower sales. The Service noted that there are few subjects that will garner the same level of support as the Breast Cancer Research stamp. The Service also noted that it rarely consults with advocacy groups regarding the stamp design because it is difficult to gain consensus.

In 2005, we also reported that support may be further enhanced if the semipostal or available marketing information clearly indicated how the proceeds will be used. During this review, three of the five advocacy groups affiliated with preventing domestic violence told us that confusion about how proceeds would be used also affected stamp sales. One advocacy group specifically described this confusion as concern in the domestic violence community that proceeds from the Stop Family Violence stamp might go to children’s programs in general—and not specifically to enhance services for children exposed to domestic violence.

According to officials from this advocacy group and another, had it been known early on how the proceeds would be used, the domestic violence community would have given the stamp its full support and would have been more likely to advertise it. Both of these efforts could have resulted in higher Stop Family Violence stamp sales—as, according to the American Red Cross and the BBB Wise Giving Alliance officials, advocacy groups are the most useful tool for getting the word out about charitable causes and fund-raising efforts.

In addition, we reported in 2005 that, comparatively speaking, a limited amount of advertising was performed to promote sales of the Stop Family Violence stamp. The Breast Cancer Research and Heroes of 2001 stamps had extensive Service advertising campaigns, as the Service spent nearly $900,000 to advertise the Breast Cancer Research stamp and over $1.1 million for the Heroes of 2001 stamp. However, due to an overall reduction in the Service’s budget, since 2003 advertising for all stamps, including semipostals, were limited to in-store messaging. Consequently, when the Stop Family Violence stamp was issued, the Service had established a policy that all costs incurred for advertising semipostals would be recovered from the semipostal’s proceeds. As a result, the advertising costs incurred for this stamp were deducted from its proceeds.

When the Service met with ACF before the Stop Family Violence stamp was issued, the Service proposed spending $1.5 million or more on an advertising campaign to be funded by future Stop Family Violence stamp proceeds. Because of the uncertainty about how much money would be raised through sales of the stamp, ACF decided not to pursue the proposed advertising campaign. Instead, the Service and ACF looked to the advocacy groups to promote the semipostal. However, as discussed above, uncertainty about how the proceeds would be used was one reason why the domestic violence community did not fully support the semipostal. Through May 1, 2007, the Service spent about $78,000 to advertise the Stop Family Violence stamp, and about $77,000 was recovered from the stamp’s proceeds. The postage rate for the Stop Family Violence stamp did not change during its sales period, but the postage rate for a First-Class stamp did increase—causing the differential revenue percentage to decline. Table 3 illustrates these changes.

Designated Agencies Have Distributed Semipostal Proceeds, but Only DOD and ACF Have Reported Their Use of the Proceeds to Congress

All of the designated federal agencies have distributed proceeds from the sale of semipostals to their respective causes. Both NIH and DOD have started to use proceeds from the sale of the Breast Cancer Research stamp to fund new programs. ACF has used proceeds from the Stop Family Violence stamp to award nine grants under a program that provides funds to organizations that deliver services to children who have been exposed to domestic violence. Finally, FEMA has recently distributed the remaining proceeds from the Heroes of 2001 stamp to the families of emergency relief personnel who were either killed or permanently disabled while serving in the line of duty in connection with the terrorist attacks of September 11, 2001. Of the four designated agencies, only DOD and ACF have submitted to Congress a GAO-recommended report on the agency’s use of semipostal proceeds.

Breast Cancer Research Stamp Proceeds Used to Fund New Programs at NIH and DOD

Proceeds from the sale of the Breast Cancer Research stamp fund breast cancer research grants and programs supported by NIH and DOD. NIH, which began receiving proceeds from the Breast Cancer Research stamp in 1998, has distributed its share of the proceeds through four different programs. Initially, NIH used the proceeds to award high-risk research grants through the Insight Awards to Stamp Out Breast Cancer initiative. This program was administered by the National Cancer Institute (NCI). In 2003, NIH created the Exceptional Opportunities in Breast Cancer Research initiative, which grants stamp proceeds to more traditional, well- established research projects that would not have been otherwise funded. In 2006, NIH started using Breast Cancer Research stamp proceeds for the Trial Assigning Individualized Options for Treatment (TAILORx) and the Breast Pre-Malignancy Program. TAILORx is designed to determine which patients with early stage breast cancer are most likely to benefit from chemotherapy and, therefore, to reduce the use of chemotherapy in patients that are unlikely to benefit. The Breast Pre-Malignancy Program is an NCI-wide program in breast cancer research that includes the areas of prevention, etiology, biology, diagnosis and molecular epidemiology. This program was created in the fall of 2005 when NCI leaders recommended that the Breast Cancer Research stamp proceeds be used to fund a program addressing multiple aspects of breast cancer pre-malignancy. They hoped that linking NCI’s research programs with research programs underway at universities, medical schools, hospitals, and research institutions, would create a collaborative and integrated program that would result in new discoveries and interventions.

As previously discussed, NIH received approximately $38 million from the Service from the sale of the Breast Cancer Research stamp. Of this amount, NIH has spent nearly $26 million and has set aside an additional $8 million to cover the remainder of the Exceptional Opportunities in Breast Cancer Research initiative and the Breast Pre-Malignancy program. NIH has not yet determined whether it will use the remaining $4 million for an existing or new breast cancer research program. NIH has not used any of the stamp proceeds to manage these programs; and as a result, the proceeds available for breast cancer research were not reduced.

DOD also began receiving Breast Cancer Research stamp proceeds in 1998. Initially, DOD’s share of the proceeds from the Breast Cancer Research stamp funded grants under its Idea Awards Program, which funds innovative approaches to breast cancer research. In 2007, DOD began using stamp proceeds to fund Synergistic Idea Awards. This program, which is designed to promote new ideas and collaborations, is similar to the Idea Awards Program in that it funds innovative, high-risk, high-reward breast cancer research but differs in that it requires two researchers to work synergistically on a research project. Both programs are administered by the Office of the Congressionally Directed Medical Research Programs, which is part of the U.S. Army Medical Research and Materiel Command. DOD received approximately $16.4 million from the Service from the sale of the Breast Cancer Research stamp. DOD has spent its share of the stamp’s proceeds for grants, except for approximately $608,000, or about 4 percent, which has been used for overhead costs related to managing the grants. Table 4 contains information about NIH and DOD grants, including the size and number of grants awarded.

Grants awarded under the NIH Insight Awards and Exceptional Opportunities programs and DOD Idea Awards program have resulted in significant accomplishments in breast cancer research, according to agency officials. The TAILORx and Breast Pre-Malignancy programs first received funding in 2006 and, according to NIH, it is too soon to identify major accomplishments from these initiatives. Table 5 provides some examples of research findings from NIH’s Insight Awards and Exceptional Opportunities programs and DOD’s Idea Awards that were funded with proceeds from the Breast Cancer Research stamp.

ACF Uses Stop Family Violence Stamp Proceeds for Grant Program

ACF is using the proceeds from the Stop Family Violence stamp to fund a discretionary grant program called Demonstration of Enhanced Services to Children and Youth Who Have Been Exposed to Domestic Violence that supports children who have been exposed to domestic violence. This grant program is administered under the Family Violence Prevention and Services Act Program (FVPSA). Stop Family Violence stamp proceeds have temporarily increased FVPSA’s budget for discretionary grants from $2.4 million per year to approximately $3.5 million per year. This grant program was created to increase the availability of child-centered services, develop and test new interventions and identify promising practices, and to expand the capacity of domestic violence shelters and community programs to effectively serve children exposed to violence. Some of the eligible activities covered under the grant program include providing services to children exposed to domestic violence, developing processes to ensure confidentiality of information shared by adult victims of domestic violence and their children, providing training to service providers, and developing educational materials for delivering intervention and prevention services to children who have been exposed to domestic violence.

The Service distributed about $3.2 million in stamp proceeds to ACF from May 2004 to May 2007. In June 2005, ACF published the grant opportunity announcement. ACF received 65 applications and selected nine applicants to receive 3-year grants. In fiscal years 2005 and 2006, each grantee received approximately $130,000 per year. In fiscal year 2007, ACF distributed about $96,000 to each of the grantees, to expend the balance of stamp proceeds. ACF is distributing all stamp proceeds under the grants program. ACF has absorbed the costs of managing the grant program by managing the program with existing staff. Also, ACF has funded the peer review of grant applications and supported an annual training and technical assistance meeting for grant recipients. Table 6 provides information about grants awarded by ACF with Stop Family Violence stamp proceeds.

The projects funded by this grant program are still underway, and ACF has not yet evaluated its accomplishments. According to ACF, several grantees are evaluating the effectiveness of their efforts and have reported significant progress in achieving their project goals. For example, one goal is to expand the capacity of domestic violence prevention programs to address the needs of children and families in and out of emergency shelters. Another goal is to develop and enhance community-based interventions for children exposed to domestic violence whose parents have not sought the services of a domestic violence prevention program. During the final year of program funding, ACF plans to initiate an effort to identify, describe, and disseminate promising practices that emerge from the projects.

FEMA Recently Distributed Proceeds from Heroes of 2001 Stamp

FEMA has received over $10.5 million from Heroes of 2001 stamp proceeds for distribution to the families of emergency relief personnel who were either killed or permanently disabled while serving in the line of duty in connection with the terrorist attacks against the United States on September 11, 2001. The Service transferred the proceeds to FEMA in six disbursements from November 2002 to May 2005. Once all of the proceeds were received, FEMA published an Interim Rule in the Federal Register on July 26, 2005, that established the program to be used to distribute the stamp proceeds. This rule established that the funds would be distributed equally among all of those deemed eligible. A notice announcing the application period for the program was published in December 2005, and FEMA accepted applications from December 2, 2005, until April 3, 2006. The first payment of funds was distributed to eligible applicants in November 2006 and FEMA made the final payments in August 2007. Because the total amount available and the number of eligible recipients was unknown, FEMA decided to wait until the end of the Heroes of 2001 stamp sales period before finalizing this program and beginning the process of identifying recipients. Table 7 provides information about FEMA’s distribution of Heroes of 2001 stamp proceeds.

FEMA conducted outreach efforts prior to and early into the application process to inform potential applicants about the program and its requirements. These efforts included face to face briefings with relevant New York City area emergency relief agencies and their labor unions, as well as discussions with emergency relief agencies in Shanksville, PA, and areas surrounding the Pentagon in Washington, D.C. Broadcast e-mails were forwarded to all of the urban search and rescue teams that assisted at the locations of the attacks. In addition, agency and union newsletters and other media in the New York City area carried stories regarding the availability of the program and how to apply.

Specifically, as it related to assisting families of deceased emergency relief workers, the New York City Police Department, New York City Fire Department, and the Port Authority of New York and New Jersey all cooperated and coordinated with FEMA by providing special assistance and directly notifying the families of the deceased about how to avail themselves of the program. In addition, these agencies assisted applicants by completing the appropriate sections of the applications, as required. However, assisting the large number of applicants in preparing their paperwork placed an unexpected burden on these agencies, according to FEMA and officials from these agencies. When we discussed the process for distributing the stamp proceeds with FEMA and these agencies, all officials agreed that the process was collaborative and successful. According to officials from the emergency relief agencies, the application process required an extensive amount of work, but ultimately grant recipients were grateful to receive the funds and generally were not concerned about the length of time it took FEMA to disburse the stamp proceeds.

FEMA received a total of 1,945 applications and determined that 1,377 applicants were eligible to receive funds. To apply for Heroes of 2001 stamp proceeds, victims or their families had to complete the application and submit supporting documentation. This documentation had to demonstrate that the individual was present at an eligible site—World Trade Center, Pentagon, or Shanksville, PA— during the 96 hour period required for eligibility and confirm that the individual was deceased or living with a permanent physical disability as a result of the attacks. Examples of documents used to ascertain eligibility included, among other things, death certificates, worker compensation agency decisions, Social Security Administration disability documents, and affidavits from employers and co-workers. Once FEMA received the application and required documentation, a staff attorney and the project manager reviewed the applicant’s file. If they agreed that all elements necessary to qualify for the grant were clearly present and documented, they recommended the application for approval on a consent agenda for the next meeting of the Heroes Stamp Review Panel, which consisted of staff from FEMA, the National Fire Academy, and the Emergency Management Institute. Any questionable applications were reviewed and evaluated individually by the Heroes Stamp Review Panel. Applicants who were determined to be ineligible through this process were allowed an opportunity to appeal the decision.

Even though FEMA conducted outreach efforts in metropolitan Washington, D.C., and Shanksville, PA, no applications were received from these areas. All of the applicants and recipients were emergency relief workers from the attacks in New York. A large majority of applicants and recipients were emergency relief personnel that are permanently disabled as a result of serving in the line of duty in connection with the terrorist attacks. Table 8 provides additional information about the recipients of stamp proceeds.

The majority of recipients of Heroes of 2001 stamp proceeds were firefighters involved in rescue efforts related to the terrorist attacks. The firefighters included members of the New York City Fire Department, volunteer firefighters from other fire departments in the area, and members of urban search and rescue teams. Other recipients included law enforcement, Emergency Medical Services (EMS), and other safety personnel who were involved in the rescue efforts. Table 9 below lists the number of applicants and recipients in each of these categories.

FEMA distributed the entire amount of the stamp’s proceeds to the 1,377 eligible recipients. FEMA decided to distribute an equal portion of the proceeds to each eligible recipient and each one received $7,672.53. It was initially unclear how many of the applicants would be deemed eligible to receive the stamp proceeds, so FEMA distributed the proceeds using a three-stage approach. This allowed some of the funds to be distributed to the recipients while the remaining eligibility decisions and appeals processes were still in progress.

According to FEMA, several factors contributed to the length of time it took to distribute the funds. First, FEMA decided that each recipient would receive an equal amount of the proceeds, which meant that all of the recipients had to be identified and all appeals had to be completed before the final dollar amount of each award could be determined. Second, the majority of the applicants and recipients were permanently disabled as a result of serving in the line of duty in connection with the terrorist attacks. Some of these disabilities did not surface until well after the attacks, and the process to determine which applicants met the criteria was complicated. For example, if a firefighter claimed eligibility based on suffering from respiratory disease, it could be difficult to prove that their injuries resulted from involvement in the rescue efforts following the terrorist attacks and not from his entire firefighting career. Third, verification of these injuries required extensive paperwork, which had to be completed, in part, by the emergency relief agencies with the use of existing personnel. According to officials from some of these agencies, it took considerable effort to complete the paperwork. When these agencies became backlogged, FEMA allowed applicants to submit partial paperwork, as long as all required documentation was received by the deadline.

Although the enabling legislation authorized the Service to recover administrative and related costs for selling the stamp, FEMA was not authorized to recover its administrative costs for the actual operation of the program to distribute the proceeds. FEMA estimates that it cost about $383,000 to administer the program. This sum includes the salary and benefits of U.S. Fire Administration staff responsible for the day to day management of the program, postage, travel costs, setting up a toll free hotline, and supplies.

Some Agencies Report on Use of Stamp Proceeds

In our 2005 report, we recommended that the designated agencies issue reports to Congress on their use of semipostal proceeds. Program reporting is important because it ensures accountability and provides information to Congress and other interested parties regarding the use of proceeds. The designated agencies have varied in their response to our recommendation. DOD issued a report to Congress in July 2007 on its use of proceeds from the Breast Cancer Research stamp and plans to report annually as part of its report on Congressionally Directed Medical Research Programs. In addition, DOD provides information about the use of Breast Cancer Research stamp proceeds through information papers and its website. ACF prepared a report on its use of proceeds from the Stop Family Violence stamp and issued it to Congress in August 2007. The report includes information on the use of the proceeds and the related accomplishments achieved to date. Since 2007 is the final year for funding the grant program that uses Stop Family Violence stamp proceeds, the grantees will be preparing reports on the effectiveness of their efforts and the lessons learned. Using these reports, ACF anticipates preparing a final report for Congress on the grant program for release in 2009. FEMA plans to issue a report on its distribution of Heroes of 2001 stamp proceeds in the fall of 2007. NIH does not have any plans to report to Congress on its use of proceeds from the Breast Cancer Research stamp, but NIH officials noted that information on the breast cancer stamp is available to the public on its website and, occasionally, through the NCI newsletter. We found that NIH’s website and NCI newsletter do provide useful overview information about NIH’s use of Breast Cancer Research stamp proceeds. However, NIH’s website did not provide detailed information on the amount of proceeds received to date, how the proceeds were used and any related accomplishments resulting from the use of these proceeds.

While we are not making any new recommendations in this report, we reaffirm our prior recommendation aimed at ensuring greater accountability and greater support for the Breast Cancer Research stamp. Specifically, in our September 2005 report, we recommended that the Secretary of Health and Human Services submit to the congressional committees with jurisdiction over the Service annual reports on the amount of funding received from the Breast Cancer Research stamp, how these funds were used, and accomplishments achieved with these funds.

Agency Comments

We provided a draft of this report to the Service, ACF, DOD, FEMA, HHS, and NIH for review and comment. These organizations did not offer overall comments on the draft report. They provided technical comments, which we incorporated where appropriate.

We are sending copies of this report to Senators Dianne Feinstein and Kay Bailey Hutchison and Representatives Joe Baca and Wm. Lacy Clay 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 Regulatory 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 questions about this report, please contact me at (202) 512- 2834 or 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; Jennifer Clayborne; Colin Fallon; Kathleen Gilhooly; Brandon Haller; Josh Ormond; and Stephanie Purcell.

Appendix I: Scope and Methodology

To determine the amount of money raised through the sale of the semipostals, we analyzed semipostal sales data that the U.S. Postal Service (Service) provided to us. These data included the amount of quarterly stamp sales and the amount of proceeds that the Service transferred to the four federal agencies designated for each semipostal. We also interviewed officials from the designated federal agencies to confirm the amount of proceeds each received from the Service. The four designated federal agencies are the National Institutes of Health (NIH) and the Department of Defense (DOD) for the Breast Cancer Research semipostal; the Department of Homeland Security (DHS) for the Heroes of 2001 semipostal; and the Administration for Children and Families (ACF) within the Department of Health and Human Services for the Stop Family Violence semipostal. In addition, we obtained stakeholders’ views on what factors affected semipostal sales. For example, we spoke with Service officials; 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. Also, we interviewed Dr. Ernie Bodai, who is credited with conceiving the idea for the Breast Cancer Research stamp, and Ms. Betsy Mullen, who lobbied Congress for the stamp along with Dr. Bodai. Table 10 identifies the stakeholders whom we spoke with. To determine the reliability of the data we received, we obtained and reviewed specific information on the Service’s data collection and processing system. We determined that the data were sufficiently reliable for the purpose of this report.

To determine how the designated federal agencies have used semipostal proceeds and reported results, we interviewed key officials from each agency that receives these funds. These agencies included the National Cancer Institute within NIH, the U.S. Army Medical Research and Materiel Command within DOD, the Federal Emergency Management Agency within DHS, and ACF. In addition, we obtained and reviewed agency documentation pertaining to 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, and grant outcomes.

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 discussed the design of the semipostals, advertising, and postage rate increases with officials in the Service’s Office of Stamp Services.

Appendix II: Postal Service Semipostal Costs Recovered

According to the Postal Service (Service), 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.

USPS, United States Postal Service: Response to the General Accounting Office Recommendations on the Breast Cancer Research Stamp (June 25, 2004).

Costs reported by the Service totaled nearly $18.2 million through June 30, 2007 (see table 11). Costs for the Breast Cancer Research stamp accounted for $12.7 million of this amount. The Service determined that about $1.9 million of the total costs related to the three stamps represented costs that were attributable specifically to the semipostals, would not have been incurred for comparable stamps, and therefore, needed to be recovered. The recovered amounts varied from $1.2 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 11 describes the semipostal costs incurred and recovered by the Service.

The specific costs recovered from surcharge revenue varied by amount and type of expenditure for each semipostal (see tables 12 to 14, which show costs for each semipostal). As we explained in our September 2005 report, one of the differences is advertising. The Breast Cancer Research and Heroes of 2001 stamps incurred advertising costs of about $1 million, but when they were issued, the Service had a budget to advertise stamps. Because advertising costs would be incurred for comparable stamps, the Service did not recover these costs. When the Stop Family Violence stamp was issued, the Service had, among other things, eliminated all stamp advertising except for in-store messaging, as previously discussed. Subsequently, the Service established a policy that all costs incurred for advertising semipostals would be recovered from the semipostal’s surcharge revenue. Therefore, the advertising costs incurred for this stamp were deducted from the surcharge revenue.

Appendix III: NIH Breast Cancer Research Awards Funded with Breast Cancer Research Stamp Proceeds

In November 1998, National Institutes of Health (NIH) began receiving Breast Cancer Research stamp proceeds from the Postal Service. Since then, NIH has distributed the proceeds—totaling nearly $31 million— through four different mechanisms. Initially, proceeds from the stamp were used to award 87 grants under the Insight Awards to Stamp Out Breast Cancer initiative. Since 2003, NIH used the proceeds to award 31 grants under the Exceptional Opportunities in Breast Cancer Research initiative. In recent years, the agency has used its share of the proceeds to fund the Trial Assigning Individualized Options for Treatment (TAILORx) and the Breast Pre-Malignancy Program. Grants awarded under each program are listed below.

Insight Awards

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. Since fiscal year 2000, NCI distributed 87 Insight Awards totaling about $9.4 million. Most of the awards were for 2-year periods. Table 15 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.

Exceptional Opportunities in Breast Cancer Research

The Exceptional Opportunities in Breast Cancer Research 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 the National Cancer Institute (NCI). In total, NCI awarded 31 Exceptional Opportunities Awards totaling nearly $10.8 million. Each grant is for a maximum of four years. Table 16 provides information about each Exceptional Opportunities award, including the fiscal year of the award, sponsoring institution, principal investigator, research area, and amount of the award.

In 2006, NIH began funding the Trial Assigning Individualized Options for Treatment (TAILORx) with proceeds from the Breast Cancer Research stamp. The trial is designed to determine which patients with early stage breast cancer would be more likely to benefit from chemotherapy and, therefore, reduce the use of chemotherapy in those patients who are unlikely to benefit. TAILORx seeks to incorporate a molecular profiling test (a technique that examines many genes simultaneously) into clinical decision making and, thus, spare women unnecessary treatment if chemotherapy is not likely to be of substantial benefit to them. The goal of TAILORx is to determine the most effective current approach to cancer treatment, with the fewest side effects, for women with early-stage breast cancer by using a validated diagnostic test developed by Genomic Health, Inc. in collaboration with the National Surgical Breast and Bowel Project, a network of cancer research professionals. The test is provided free to all patients that meet the eligibility requirements for the study.

In fiscal year 2006, NIH awarded $4,500,000 to Genomic Health, Inc. to offset the costs of testing. As of the middle of May 2007, there were 1,459 patients who were preregistered and had their tumors tested. The number of patients to be tested during the trial is unknown, but NIH anticipates that it will range from approximately 6,000 to 10,000, depending on the preliminary results of the trial.

NCI Breast Pre- Malignancy Program

The NCI Breast Pre-Malignancy Program represents a comprehensive program in breast cancer pre-malignancy research that includes the areas of prevention, etiology, biology, diagnosis, and molecular epidemiology. In fiscal year 2006, NCI awarded 6 grants under the program for a total of $853,000 and funded research projects at NCI totaling $371,000. The Breast Pre-Malignancy Program began in the fall of 2005 when NCI leadership recommended that stamp funds be used to address multiple aspects of breast cancer around a unifying theme—breast pre-malignancy. In addition, they recommended that the program be supported via NCI-wide programs, which support federal researchers located on the NIH campuses in Bethesda and Frederick, Maryland, and extramural research programs, which support research underway in universities, medical schools, hospitals, and research institutions across the country. This provided an opportunity to create a collaborative and integrated scientific program across NCI divisions and centers and to synergistically reach new discoveries and interventions. The NCI Breast Pre-Malignancy Program consists of six research components supporting research on pre-malignant lesions, cancer prevention techniques, and methods for detecting breast cancer or pre-cancers earlier. The program involves work on breast cancer stem cells, pathways, the microenvironment, molecular target identification (biomarkers), imaging, drug recovery, and prevention and translational research. Table 17 provides information about each Breast Pre-Malignancy award, including the fiscal year of the award, sponsoring institution, principal investigator, and amount of the award.

Appendix IV: DOD Breast Cancer Research Awards Funded with Breast Cancer Research Stamp Proceeds

As of September 2007, The Department of Defense (DOD) has awarded 39 breast cancer research grants totaling about $15.8 million using proceeds from the Breast Cancer Research stamp. From 1999 to 2006, DOD applied Breast Cancer Research stamp proceeds to its Idea Awards, which are funded under the Breast Cancer Research Program. These grants focus on innovative approaches to breast cancer research and cover research areas, such as genetics, biology, imaging, epidemiology, immunology, and therapy. In 2007, DOD started using Breast Cancer Research stamp proceeds to fund the Synergistic Idea Awards. These awards support innovative, high-risk, high-rewards breast cancer research collaborations between two independent researchers. Grant proposals must demonstrate the synergistic aspects of the collaboration. According to DOD officials, about $608,000 of the transferred funds had been used for overhead costs related to managing the grants. Table 18 provides information about each Idea Award funded with Breast Cancer Research stamps proceeds, including the fiscal year of the award, sponsoring institution, principal investigator, research area, and the amount of the award.

Table 19 provides information about the Synergistic Idea Awards funded with proceeds from the stamp, including the fiscal year of the award, sponsoring institution, principal investigator, research area, and the amount of the award.

Appendix V: ACF Awards Funded with Stop Family Violence Stamp Proceeds

As of June 2007, The Administration for Children and Families (ACF) awarded approximately $2.3 million of the proceeds from the Stop Family Violence stamp under the Demonstration of Enhanced Services to Children and Youth Who Have Been Exposed to Domestic Violence grants program. These grants support efforts to identify, design, and test approaches for providing enhanced and direct service for the children of abused parents being served in prevention programs or to develop an expanded capacity to work within community collaborations and systems responding to children exposed to domestic violence. In fiscal years 2005 and 2006, ACF awarded nine grantees approximately $130,000 each year. In fiscal year 2007, the final year of the program, ACF awarded about $96,000 to each grantee, to expend the balance of the Stop Family Violence stamp proceeds. Table 20 contains information about each grant funded with Stop Family Violence stamp proceeds, including the name of the grantee, the location of the organization, and total amount awarded.