Breast Cancer Research Stamp: Millions Raised for Research, but Better
Cost Recovery Criteria Needed (Letter Report, 04/28/2000, GAO/GGD-00-80).
Pursuant to a legislative requirement, GAO provided information on the
Postal Service's Breast Cancer Research Stamp, focusing on: (1) how the
Service went about identifying and allocating the costs it incurred in
developing and marketing the Breast Cancer Research Semipostal (BCRS)
and the issues associated with effectiveness; (2) the statutory
authorities and constraints associated with the Service's issuance of
semipostals, in general, as a means of fund-raising; and (3) the
appropriateness of using the BCRS as a means of fund-raising.
GAO noted that: (1) on March 16, 2000, the Service reported that the
bulk of its costs to develop and sell the BCRS through December 31,
1999, was $5.9 million; (2) according to the Service, almost all of
these costs would have been incurred with any blockbuster commemorative
stamp issue and have been recovered through the 33 cents that
constitutes the First-Class postage portion of the BCRS; (3) in a March
report, the Postal Service Office of Inspector General (OIG) identified
$836,000 in costs that it believed were attributable to the BCRS program
and not previously identified by the Service; (4) after reviewing a
draft of OIG's report, the Service agreed that $488,000 of these costs
were incurred exclusively on behalf of the BCRS program, and included
them in its reported $5.9 million in BCRS costs; (5) the Service and OIG
had not, as of March 31, 2000, resolved their differences over the
remaining +$348,000 in costs identified by OIG; (6) the Stamp Out Breast
Cancer Act did not provide quantitative measures for evaluating the
effectiveness of the BCRS as a fund-raiser; (7) however, the act
provided that the BCRS would be voluntary and convenient, and it would
raise funds for breast cancer research; (8) to these ends, BCRS has been
successful; (9) the BCRS had raised about $10 million for breast cancer
research by the end of 1999 and is expected to raise more by the time
sales are scheduled to conclude; (10) with respect to appropriateness,
about 71 percent of adults responding to the public opinion survey GAO
commissioned, and most of the key stakeholders GAO spoke with, believed
that it is appropriate to use semipostals issued by the Service to raise
funds for nonpostal purposes; (11) GAO does not believe that the Service
has the authority to issue semipostals on its own volition without
specific legislation authorizing it to do so; (12) although the act gave
the Service the specific authority to issue the BCRS, it was silent with
regard to the appropriateness of the Service issuing additional
semipostals for other causes; (13) postal officials have stated that in
the absence of statutory authority to issue semipostals, it is unclear
whether selling such stamps would be consistent with the underlying
statutory and regulatory authorities governing the Service; and (14) GAO
does not interpret the Service's underlying statutory authority as
authorizing it to establish postage rates and fees for a particular
stamp at a level that exceeds its postage value for purposes of
generating revenue for contributions to a charitable cause.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-00-80
TITLE: Breast Cancer Research Stamp: Millions Raised for
Research, but Better Cost Recovery Criteria Needed
DATE: 04/28/2000
SUBJECT: Breast cancer
Cost analysis
Health research programs
Postal service
Performance measures
Statutory law
Postal rates
Program evaluation
Postal law
Cancer research
IDENTIFIER: USPS Breast Cancer Research Semipostal Program
Germany
Netherlands
Belgium
New Zealand
Austria
Canada
United Kingdom
Sweden
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United States General Accounting Office
GAO
Report to Congressional Subcommittees
April 2000
GAO/GGD-00-80
BREAST CANCER RESEARCH STAMP
Millions Raised for Research, but Better Cost
Recovery Criteria Needed
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Contents
Page 361GAO/GGD-00-80 Breast Cancer Research Stamp
Letter 1
Appendix I 38
Objectives, Scope, and
Methodology
Appendix II 42
Foreign Postal
Administrations'
Experiences With
Semipostals
The Tradition of Foreign Semipostals 42
Differences in Foreign Semipostal 44
Programs
Similarities in Foreign Semipostal 46
Programs
Appendix III 48
Comments From the U.S.
Postal Service
Appendix IV 50
GAO Contact and Staff
Acknowledgments
GAO Contact 50
Acknowledgments 50
Tables Table 1: Cost of Developing and 12
Selling the BCRS, Through December
31, 1999, as Reported by the Postal
Service
Table 2: Costs Reported Through 15
December 31, 1999, That the Service
plans to Recoup from the BCRS
Surcharge
Table 3: Transfers Made to NIH and DOD 19
for Breast Cancer Research as of
December 31, 1999
Table 4: Average Monthly Surcharge 22
Revenue Generated and Average Monthly
Surcharge Revenue per Million
Population for the 13 Semipostals
Included in Our Survey
Table 5: Percent of Total Surcharge 23
Revenue Reported as Being Transferred
to the 13 Semipostals' Designated
Beneficiaries
Table 6: Appropriateness of 29
Semipostals
Table II.1: Year in Which Foreign 43
Postal Administrations Began Selling
Semipostals
Table II.2: Foreign Postal 44
Administrations: Number of Semipostal
Issues, 1994 - 1998
Table II.3: Foreign Postal 45
Administrations: Beneficiaries of
1998 Semipostal Surcharge Revenue
(Unless Otherwise Noted)
Table II.4: Surcharge Amounts Included 46
by Foreign Postal Administrations
(1998 Unless Otherwise Noted)
Figures Figure 1: Reproduction of the 1998 7
Breast Cancer Research Semipostal
Abbreviations
BCRS Breast Cancer Research Semipostal
DOD Department of Defense
ICR International Communications Research
MOU Memorandum of Understanding
NBCC National Breast Cancer Coalition
NIH National Institutes of Health
B-282358
Page 16 GAO/GGD-00-80 Breast Cancer Research Stamp
B-282358
April 28, 2000
The Honorable Thad Cochran
Chairman
The Honorable Daniel Akaka
Ranking Minority Member
Subcommittee on International Security,
Proliferation and Federal Services
Committee on Governmental Affairs
United States Senate
The Honorable John M. McHugh
Chairman
The Honorable Chaka Fattah
Ranking Minority Member
Subcommittee on the Postal Service,
Committee on Government Reform
House of Representatives
This report discusses the Postal Service's Breast
Cancer Research Stamp. It responds to Section 2
(b) of the Stamp Out Breast Cancer Act, Public Law
105-41, August 13, 1997, which directs the
Comptroller General to submit a report to Congress
that
� describes the monetary and other resources
required of the Postal Service in developing and
selling the Breast Cancer Research Semipostal
(BCRS),1
� evaluates the effectiveness of using the BCRS
as a means of fund-raising, and
� evaluates the appropriateness of using the
BCRS as a means of fund-raising.
In doing this work, we focused most heavily on how
the Service went about identifying and allocating
the costs it incurred in developing and marketing
the BCRS and the issues associated with
effectiveness. Additionally, we discuss the
statutory authorities and constraints associated
with the Postal Service's issuance of semipostals,
in general, as a means of fund-raising. We also
provide information that Congress may want to
consider as it deliberates proposals for
additional semipostals.
As part of our evaluations of the effectiveness
and appropriateness of using the BCRS as a means
of fund-raising, we discuss the opinions of key
stakeholders involved with breast cancer
research/funding and philately. We also provide
information on 12 semipostals issued by foreign
postal administrations. The information on the 12
semipostals was collected from 8 of 10 foreign
postal administrations that responded to our
questionnaire. We also discuss the results of a
statistically generalizable survey of adults (18
years of age or older) in the continental United
States that we commissioned to determine the
public's opinion of the BCRS. Additionally, we
provide information on BCRS sales and the
resulting proceeds transferred to the National
Institutes of Health (NIH) and the Department of
Defense (DOD) for breast cancer research.
The Stamp Out Breast Cancer Act directed the
Postal Service to establish a special stamp-known
as a semipostal-to raise money for breast cancer
research. This stamp, the BCRS, is the first stamp
ever issued by the Postal Service to raise money
for nonpostal purposes. The BCRS is a
"blockbuster" commemorative stamp,2 costs 40
cents, and is valid for the 33-cent First-Class
postage rate, leaving 7 cents as surcharge
revenue. The act provides that the Service is to
deduct from the surcharge revenue the reasonable
costs it incurs in carrying out the act, including
those attributable to the printing, sale, and
distribution of the BCRS, as determined under
regulations it shall prescribe. The Service is to
remit the remaining net proceeds from the
surcharge revenue to NIH and DOD for breast cancer
research. Seventy percent of the net proceeds go
to NIH, with the remaining 30 percent going to
DOD's medical research program.
Results in Brief
It is not clear precisely how much it cost to
develop and sell the BCRS because there were costs
that the Service did not track. Postal officials
said the costs not tracked were inconsequential or
immaterial, and it would have been too expensive
to track these costs. On March 16, 2000, the
Service reported that the bulk of its costs to
develop and sell the BCRS through December 31,
1999, was $5.9 million. According to the Service,
almost all of these costs would have been incurred
with any blockbuster commemorative stamp issue and
have been recovered through the 33 cents that
constitutes the First-Class postage portion of the
BCRS. However, the remaining costs which are
unique to the BCRS program are to be recouped from
its surcharge revenue. Since BCRS sales are not
scheduled to end until July 28, 2000, some
additional costs may be incurred.
In a report dated March 31, 2000, the Postal
Service Office of Inspector General (OIG)
identified $836,000 in costs that it believed were
attributable to the BCRS program and not
previously identified by the Service. Earlier in
March, after reviewing a draft of OIG's report,
the Service agreed that $488,000 of these costs
were incurred exclusively on behalf of the BCRS
program, and included them in its reported $5.9
million in BCRS costs. The Service and OIG had
not, as of March 31, 2000, resolved their
differences over the remaining $348,000 in costs
identified by OIG. To the extent that the
remaining costs are attributable to the BCRS
program, we believe they should be added to the
total BCRS costs and reported by the Service.
We are concerned that the Service has yet to
prescribe, as required by the act, regulations
setting forth its criteria for determining the
reasonable costs to be recouped from the surcharge
revenue generated by the BCRS. The act required
that the Service prescribe such regulations, but
it did not establish a date by which this was to
occur. Through much of the BCRS' sales period, the
Service has used an evolving set of informal
criteria to decide what costs it would recoup from
the surcharge revenue. The Service initially
planned not to recoup any costs from the surcharge
revenue; however, using its latest informal
criteria, the Service has decided that it will
recoup $482,000. According to the Service, all
other BCRS costs have been recovered through the
33-cent First-Class postage rate, but the Service
provided no data or analysis showing that these
costs have been recovered.
Because the Service has not yet developed formal,
written criteria for determining the costs to be
recouped from the BCRS surcharge revenue, as the
act requires, and has revised its informal
criteria several times since the BCRS went on
sale, it is difficult for Congress, us, and others
to evaluate how well the Service is implementing
its legislative mandate to recoup reasonable
costs. The absence of formal written criteria also
makes it difficult for Congress to determine the
appropriateness of the Service's criteria.
The act did not provide quantitative measures for
evaluating the effectiveness of the BCRS as a fund-
raiser. However, the act provided that the BCRS
would be voluntary and convenient, and it would
raise funds for breast cancer research. To these
ends, the BCRS has been successful. The BCRS is
voluntary because postal patrons may choose to
purchase it for First-Class postage at 40 cents or
purchase any of the Service's other, non-
semipostal First-Class stamps at 33 cents. It is
convenient, as attested to by 68 percent of adults
responding to the public opinion survey we
commissioned; and it had raised about $10 million
for breast cancer research by the end of 1999.
Additionally, the BCRS is expected to raise more
money for breast cancer research by the time sales
are scheduled to conclude on July 28, 2000.
The key breast cancer research/funding
stakeholders we spoke with that expressed an
opinion on the BCRS' effectiveness as a fund-
raiser believed that it had been effective. The
most serious concern expressed was that money
raised by the BCRS could be used to supplant
appropriated dollars for breast cancer
research-even though the act states that it is the
sense of Congress that the act should neither
directly nor indirectly cause a net decrease in
total funds received by NIH or DOD. In addition,
the public's view of the BCRS was generally
positive; and a majority of the adults responding
to our public opinion survey expressed a desire to
see more semipostals in the future for other
special, nonpostal purposes.
The BCRS' performance, compared to foreign
semipostals, was mixed. The BCRS generated more
money for its designated beneficiaries, in an
average month, than was reported to have been
generated by 7 of the 12 foreign semipostals. On
the other hand, on a per capita basis, 8 of the 12
foreign semipostals were reported to have
generated more money for their beneficiaries than
did the BCRS. On the basis of the collective
results of all the measures we used to evaluate
effectiveness, we believe the BCRS has been an
effective fund-raiser.
With respect to appropriateness, about 71 percent
of adults responding to the public opinion survey
we commissioned, and most of the key stakeholders
we spoke with, believed that it is appropriate to
use semipostals issued by the Service to raise
funds for nonpostal purposes. The Service,
although supportive of the BCRS, is generally
opposed to semipostals because it believes that
congressional mandates to issue semipostals expand
the Service's mission beyond what was defined by
the Postal Reorganization Act of 1970 and that the
BCRS' success may not mean success for other
semipostals. Likewise, the American Philatelic
Society opposes the use of semipostals because it
views them as a tax on the Society's members that
falls disproportionately and unfairly on their
hobby. However, the president of the American
Philatelic Society stated that if a fair process
could be designed to choose no more than two
semipostals per year, he believed stamp hobbyists
could live with that process.
The eight foreign postal administrations that
responded to the questionnaire we sent them were
evenly split on the question of the
appropriateness of their countries using
semipostals to raise funds for nonpostal purposes.
The postal administrations of Germany, The
Netherlands, Belgium, and New Zealand believed
semipostals are an appropriate way to raise money.
The postal administrations of Austria, Canada, the
United Kingdom, and Sweden believed semipostals
are inappropriate-and the United Kingdom and
Sweden have permanently discontinued semipostal
sales. Canada does not currently have any
semipostals for sale, although it has not ruled
out selling them at some future date. Although the
Austrian postal administration believes
semipostals are inappropriate, it continues to
issue them annually at the direction of its
legislature.
We do not believe that the Service has the
authority to issue semipostals on its own volition
without specific legislation authorizing it to do
so. Although the act gave the Service the specific
authority to issue the BCRS, it was silent with
regard to the appropriateness of the Service
issuing additional semipostals for other causes.
Postal officials, however, have stated that in the
absence of statutory authority to issue
semipostals, it is unclear whether selling such
stamps would be consistent with the underlying
statutory and regulatory authorities governing the
Service. We do not interpret the Service's
underlying statutory authority as authorizing it
to establish postage rates and fees for a
particular stamp at a level that exceeds its
postage value for purposes of generating revenue
for contributions to a charitable cause.
We are offering two matters for Congress to
consider should it decide that the Postal Service
is not recouping all of the costs from the BCRS
that Congress intended. We are also making
recommendations to the Postmaster General to
address the problems we identified regarding costs
to be recouped from the BCRS surcharge revenue.
Background
Congress passed the Stamp Out Breast Cancer Act on
August 13, 1997. The act required the Postal
Service to establish, within 1 year, a First-Class
stamp with an added surcharge that would allow the
public to make a contribution to breast cancer
research each time it purchased one or more of
these special stamps. The act stipulated that the
Postal Service's Board of Governors was to
determine the surcharge amount that would be added
to the First-Class postage rate. The surcharge was
not to exceed 25 percent of the First-Class
postage rate, which, at the time, was 32 cents.
The Board of Governors set the price of the stamp
at 40 cents-32 cents for First-Class postage plus
the maximum 25-percent surcharge of 8 cents.3
The act further stipulated that the BCRS was to be
offered to the public as an alternative to regular
First-Class postage, thereby allowing postal
patrons purchasing the BCRS to make a voluntary
contribution equal to the surcharge amount. The
act directed the Postal Service to make the BCRS
convenient for postal patrons to purchase. It
stipulated that the Service transfer 70 percent of
the net proceeds from the surcharge to NIH for
breast cancer research and 30 percent to DOD for
the same purpose. Net proceeds are the revenue
generated from the surcharge, less reasonable
costs incurred by the Service in carrying out the
statutory mandate, as determined by the Service
under regulations it shall prescribe. The act
directed that the Service's authority to issue the
BCRS would terminate 2 years from the date on
which the BCRS first became available to the
public.4
The BCRS was dedicated at a White House ceremony
on July 29, 1998-the date of issuance. As mandated
by the act, the BCRS is to be available for sale
through July 28, 2000-2 years from the date it was
issued.
According to the Service, the BCRS was the idea of
Dr. B.I. Bodai, the Director of Breast Surgical
Services for Kaiser Permanente, Sacramento, CA.
Literature on the BCRS states that Dr. Bodai, with
the support of Ms. Betsy Mullen, the founder of
the Women's Information Network Against Breast
Cancer, lobbied Congress to pass legislation
creating the Nation's first-ever semipostal.
The BCRS is a self-adhesive, nondenominational
First-Class commemorative stamp. According to the
Service, the BCRS was designed by Ethel Kessler of
Bethesda, MD, a breast cancer survivor. Postal
literature states that the BCRS was illustrated by
Whitney Sherman of Baltimore, MD, and features "a
black line drawing of a female figure, suggesting
a `goddess of the hunt or fight'." The words
"BREAST CANCER" and "FUND THE FIGHT. FIND A CURE."
accompany the illustration. (See fig. 1.)
Figure 1: Reproduction of the 1998 Breast Cancer
Research Semipostal
Source: U.S. Postal Service.
The Postal Service has never before issued any
semipostals, but foreign postal administrations
have used them for many years-with some
semipostals dating as far back as the 1800s.
According to the president of the American
Philatelic Society, approximately 50 countries
issued semipostals at some time during the 1990s.
Of those countries, 17 issued semipostals on a
routine basis. Those countries were Argentina,
Aruba, Austria, Belgium, Denmark, Finland, France,
Germany, Greenland, Hungary, Indonesia,
Luxembourg, The Netherlands, Netherlands Antilles,
New Zealand, Switzerland, and Turkey. The
semipostal surcharge revenues raised by those
countries went to such beneficiaries as The Red
Cross, the Olympics, social and cultural programs,
child welfare, and the promotion of philately.
NIH and DOD officials reported that they will, as
required by the act, use the money generated by
the BCRS to fund breast cancer research. NIH
officials stated that money received from the BCRS
will be used to fund peer-reviewed research
awards, such as "Insight Awards" to stamp out
breast cancer. Officials described Insight Awards
as a new initiative designed to support innovative
pilot studies that will generate a new
understanding of breast cancer.
DOD officials said that money received from the
BCRS will be used to supply additional financial
support for the extramural breast cancer research
program managed by the U.S. Army Medical Research
and Materiel Command. Officials said the money
would be spent through peer-reviewed award
mechanisms such as "Idea Awards" that are intended
to encourage innovative approaches to breast
cancer research.
On September 30, 1998, OIG reported on its review
of postal management's early actions to implement
the act. OIG identified several issues it believed
warranted postal management's attention. The key
issue focused on needed improvements in the BCRS
program to better define program costs.
Scope and Methodology
In describing the monetary and other resources
required by the Postal Service in developing and
selling the BCRS, and in evaluating the
effectiveness and appropriateness of using the
BCRS as a means of fund-raising, we interviewed
postal officials responsible for the BCRS program
and gathered and analyzed pertinent information on
costs, revenue, and resources used to develop and
sell the BCRS. During the course of our work, OIG
concluded a follow-up audit of the BCRS program.
We reviewed OIG's draft report and incorporated
its findings where appropriate. We also gathered
information on 12 semipostals issued by 8 foreign
postal administrations that had experience with
semipostals.
We interviewed key stakeholders involved with
breast cancer research/fund-raising and philately
to obtain their opinions on the BCRS. We
interviewed representatives of (1) the American
Cancer Society, who stated that the Society is the
Nation's largest nongovernmental funder of cancer
research; (2) the National Breast Cancer Coalition
(NBCC), an alliance of over 500 member
organizations and 60,000 individuals dedicated to
lobbying Congress and the states for improved
public policies for eradicating breast cancer; and
(3) the Susan G. Komen Breast Cancer Foundation, a
leader in the field of breast cancer research,
education, screening and treatment. We also
interviewed (1) Dr. B.I. Bodai, the individual
credited with conceiving the idea for the BCRS and
spearheading the lobbying effort that resulted in
Congress passing the Stamp Out Breast Cancer Act;
(2) the president of the American Philatelic
Society, which represents over 55,000 stamp
collectors; and (3) the Curator of the Smithsonian
Institution's National Philatelic Collection.
To obtain the public's views on the BCRS, we
contracted with International Communications
Research (ICR) to conduct a statistically
representative survey of adults 18 years of age
and older in the continental United States. We
researched and analyzed applicable sections of the
U.S. Code and Postal Service regulations. We also
met with NIH and DOD officials to review the
arrangements they had with the Postal Service to
receive the surcharge revenue from the BCRS and to
discuss how they planned to use that money.
Appendix I provides further details about our
objectives, scope, and methodology.
We conducted our review at Postal Service
Headquarters in Washington, D.C., between June
1999 and March 2000 in accordance with generally
accepted government auditing standards. To verify
the accuracy of financial data provided by the
Postal Service, we discussed financial
accountability for the BCRS with officials of the
Postal Inspection Service. We also reviewed a
random selection of Inspection Service audit
reports that covered, among other things, internal
controls over accountable paper-such as postage
stamps which included the BCRS.
We requested comments on a draft of this report
from the Postmaster General. The Service's
comments are discussed at the end of this letter
and are reprinted in appendix III.
Monetary and Other Resources Used to Develop and
Sell the BCRS
It is not clear precisely how much it cost the
Postal Service to develop and sell the BCRS. There
were costs the Service did not track because it
believed that these costs would be inconsequential
or immaterial. The Service reported that the bulk
of its costs through December 31, 1999 were
$5,921,000. These costs include $488,000 in BCRS
costs identified by OIG that the Service had not
identified. Additional costs may be incurred
before BCRS sales are scheduled to end on July 28,
2000. According to the Service, almost all of
these costs would have been incurred with any
blockbuster commemorative stamp issue and have
been recovered through the 33 cents that
constitutes the First-Class postage portion of the
BCRS. However, the remaining costs which are
unique to the BCRS program are to be recouped from
its surcharge revenue.
The Stamp Out Breast Cancer Act required that the
Service prescribe regulations setting forth the
criteria it will use to determine the reasonable
costs to be recouped from the surcharge revenue
generated by the BCRS. However, the act did not
establish a deadline to prescribe such
regulations.
As of March 2000, the Service had not prescribed
regulations containing formal, written criteria
for determining the reasonable costs to be
recouped from the BCRS' surcharge revenue. Through
much of the BCRS' sales period, the Service has
used an evolving set of informal criteria to
decide what costs it would recoup from the
surcharge revenue. The Service initially planned
not to recoup any costs from the surcharge
revenue; however, using its latest informal
criteria, the Service has decided that it will
recoup $482,000 in BCRS costs from the surcharge
revenue. The Service considers these costs to be
unique to the BCRS. According to the Service, all
other BCRS costs have been recovered through the
33-cent First-Class postage rate, but the Service
provided no data or analysis showing that these
costs have been recovered. Postal officials said
there may be some additional costs to be recouped
before BCRS sales are scheduled to end on July 28,
2000.
We are concerned that the Service has not clearly
articulated the criteria to be applied in deciding
what costs it would recoup from the surcharge
revenue. As of March 2000, the Service had not
prescribed formal, written criteria for
determining which of the costs that it is tracking
are to be recouped from the surcharge revenue as
contemplated by the act. Until the Service does
this, it will be difficult to evaluate the
appropriateness of the Service's criteria or to
determine if the Service is consistently applying
its criteria. Establishing formal written criteria
is particularly important given that BCRS sales
are scheduled to end shortly and that eight bills
for additional semipostals have been introduced in
Congress. Each of those bills contains the same
language about recouping reasonable costs as the
Stamp Out Breast Cancer Act does.
Cost of Developing and Selling the BCRS Is Unclear
The Postal Service reported its costs associated
with developing and selling the BCRS, through
December 31, 1999, to be $5,921,000. The Service
believed that these costs accounted for the bulk
of BCRS costs. The $5,921,000, however, does not
include direct costs for items the Service
determined to be inconsequential-e.g., minor
accounting functions related to the BCRS, such as
posting sales receipts to cashbooks in
nonautomated offices. Additionally, the $5,921,000
does not include indirect costs (overhead) which,
according to postal officials, are also
inconsequential. According to these officials, it
was not cost-effective to spend the resources that
would have been required to quantify and recoup
inconsequential costs associated with the BCRS. As
a result, it is not clear precisely how much it
cost the Postal Service to develop and sell the
BCRS.
Furthermore, the officials said there were no
staff dedicated full-time to work on the BCRS, and
no additional staff were hired because of the
BCRS. According to these officials, all work
associated with the BCRS was absorbed by existing
staff and staff budget-i.e., the Service incurred
no additional staffing-related expenses because of
the BCRS. They also told us the Service has not
tracked staff hours devoted to the BCRS. The
Service may also incur additional costs associated
with the BCRS before its sales are scheduled to
end on July 28, 2000.
The $5,921,000 in BCRS costs includes $488,000 in
costs identified by OIG that had not previously
been identified by the Service.5 In total, OIG had
identified an additional $836,000 in costs it
believed were attributable to the BCRS.6 The
Service agreed that $488,000 of those costs were
incurred exclusively on behalf of the BCRS program
and included them in its reported costs. However,
the Service disagreed that the remaining $348,000
was attributable to the BCRS. As of March 31,
2000, the Service and OIG had not resolved their
differences over the remaining costs. The $348,000
in costs that the Service disagreed with consisted
of about $221,000 in advertising and promotion
costs and about $127,000 in labor costs. According
to the Service, the approximately $221,000 in
disputed advertising and promotion costs were
rental charges for a billboard in Times Square
(New York, NY) that was used to promote
commemorative stamps in general-not just the BCRS.
OIG agrees that the billboard was rented to
promote commemorative stamps but maintains that
approximately $221,000 was the BCRS' pro rata
share of the total rental charges. The Service
also disagrees with OIG that labor costs should be
charged to the BCRS program because all work
associated with the BCRS was absorbed by existing
staff and staff budget. OIG maintains that labor
costs are a part of the "other resources"
identified in the act and should be included in
BCRS costs.
We did not review the cost differences between the
Service and OIG because we did not receive OIG's
final report until early April 2000. However, to
the extent that the remaining costs are
attributable to the BCRS program, we believe they
should be added to the total BCRS costs and
reported by the Service.
According to postal officials, if the Service were
to have tracked all monetary and other resources
used in developing and selling the BCRS, it would
have had to either (1) make substantive
modifications to its existing accounting systems
or (2) establish a separate accounting system
devoted exclusively to the BCRS. The Service
believed, given that there may be no additional
semipostals issued in the future, that it should
not spend either the time or the money that these
options would have required. Consequently, in lieu
of pursuing either of these options, the Service
decided it would identify; track; or, as
appropriate, estimate the costs in connection with
17 items that it believed would account for the
bulk of the BCRS' cost. The initial list of 17 was
subsequently expanded to 18 with the inclusion of
legal fees associated with the BCRS. The 18 items
and their reported costs, through December 31,
1999, are shown in table 1.
Table 1: Cost of Developing and Selling the BCRS,
Through December 31, 1999, as Reported by the
Postal Service
Cost item Reported Cost
Stamp design $40,000
Shipping to stamp $0a
distribution
offices/stamp
distribution networks
Printing and $2,100,000
manufacturing
Training $612,000
Rural training $0b
Reprogramming window $352,000
automation devices
Posting to cashbook $0a
(nonintegrated retail
terminal)
Inventory costs $0a
Destruction costs $0a
Market research $56,000
Flyer cost $231,000
Advertising and promotion $1,505,000
Postage to Post Offices $0a
Customer receipts $7,000
Packaging for self- $989,000
service
Vending machine training $0b
costs
Vending machine $7,000
reconfiguration
Legal fees $22,000
Total $5,921,000
aThe Service considers these costs to be minimal
and does not track them.
bRural training and vending machine training costs
are included in the cost item labeled training.
Source: U.S. Postal Service.
No Formal Criteria Established as of March 2000
The Stamp Out Breast Cancer Act requires that the
Service prescribe regulations establishing, among
other things, the criteria it would use for
determining the reasonable costs to be recouped
from the BCRS surcharge revenue. Section 2 of the
act specifies, in part, that the Service is to
recoup from the surcharge revenue "an amount
sufficient to cover reasonable costs incurred by
the Postal Service in carrying out this section,
including those attributable to the printing,
sale, and distribution of stamps under this
section, as determined by the Postal Service under
regulations that it shall prescribe." It is the
view of the Service, and we agree, that because
the act modified the term "costs" with the term
"reasonable" and empowered the Service to
determine the costs and prescribe regulations, the
Service has discretion to determine the reasonable
costs attributable to the BCRS to be recouped from
its surcharge revenue.
The act requires the Service to prescribe
regulations governing its determination of
reasonable costs to be recovered from the
surcharge revenue, but the act does not specify a
date by which the regulations are to be issued. In
June 1998, shortly before the BCRS was issued, the
Service issued a revision to its Administrative
Support Manual that provided for the Service to
track the bulk of its costs incurred in connection
with the BCRS.7 The revision to the Administrative
Support Manual further provided that the Service
would make a decision at a later date as to which
of these costs constituted the Service's
reasonable costs to be recouped from the BCRS'
surcharge revenue.8
Since revising the manual in June 1998, the
Service has acknowledged several times that it has
not yet prescribed the formal, written criteria it
will use to determine the reasonable costs that
will be recouped from the surcharge revenue. The
Memorandums of Understanding the Service signed
with NIH and DOD allow the Service up to 120 days
after BCRS sales end on July 28, 2000, to make a
final determination as to which costs will be
recouped from the surcharge revenue. Also, the
Service has sent letters to Members of Congress,
as late as June 1999, stating that it had not yet
determined what costs it would recoup from the
surcharge revenue.
As of March 2000, the Service had not yet
prescribed the regulations setting forth its
definition of reasonable costs or articulated
clearly the criteria it will apply in determining
the costs to be recouped from the surcharge
revenue.
Informal Criteria Evolved Over Time and Were Not
Always Consistently Applied
Although the Service had not prescribed formal,
written criteria by the end of March 2000, it has
used informal criteria for reviewing costs
associated with the BCRS and making decisions as
to what costs it will recoup from the BCRS'
surcharge revenue. However, the Service's informal
criteria have evolved over time, and our review of
the Service's application of these criteria
indicates that the Service has not consistently
applied its informal criteria to all of the costs
items it is tracking.
During the early months of BCRS sales, postal
officials told us that the Service did not plan to
recoup any of its costs from the surcharge
revenue. We discussed this approach with postal
officials and were later told that the Service had
decided to recoup certain costs. We asked the
officials what criteria the Service planned to use
to recoup costs. They told us the Service planned
to recoup costs unique to the BCRS that were above
and beyond the costs normally incurred with a
regular commemorative stamp for the 18 cost items
listed in table 1. Using these cost items and the
costs normally incurred with a regular
commemorative stamp as its informal criteria, the
Service, at our request, identified the costs that
it was tracking that it considered to be unique to
the BCRS and planned to recoup from the surcharge
revenue. We reviewed the Service's application of
its criteria and pointed out to the Service that
it did not appear to have consistently applied its
criteria to all 18 cost items. For example, we
questioned, among other things, why $1.5 million
in advertising and promotion costs were not being
recouped from the surcharge revenue, given that
the Service does not normally spend money
advertising and promoting regular commemorative
stamps. After additional discussion, postal
officials told us they had revised their informal
criteria to reflect their plans to recoup costs
unique to the BCRS that were above and beyond the
costs normally incurred with a blockbuster
commemorative stamp for the 18 cost items.
Applying its revised criteria, they said that
advertising and promoting is normally done with a
blockbuster commemorative stamp, and these costs
are recovered through the 33-cent First-Class
postage rate.
Using the 18 cost items and the costs normally
incurred with a blockbuster commemorative stamp as
its informal criteria, we again asked the Service
to review the cost items it was tracking to decide
which costs should be recouped from the surcharge
revenue. The Service applied its informal criteria
to the $5,921,000 in BCRS reported costs through
December 31, 1999, and decided that $482,000 of
the costs were unique to the BCRS and should be
recouped from the surcharge revenue. Postal
officials said there may be some additional costs
to be recouped before BCRS sales are scheduled to
end on July 28, 2000.
Postal officials told us that the remaining
$5,439,000 in BCRS costs are common to a
blockbuster commemorative stamp, and are recovered
through the 33-cent First-Class postage rate.
Therefore, the Service does not view these
remaining costs as subject to recovery from the
surcharge revenue. According to postal officials,
the Service does not plan to recoup these
remaining costs from the surcharge revenue because
to do so would be double-charging. Table 2
identifies the unique costs the Service plans to
recoup from the surcharge revenue.
Table 2: Costs Reported Through December 31,
1999, That the Service plans to Recoup from the
BCRS Surcharge
Cost item Reported Allocation of costs
Cost
Costs common Costs
to a recouped or
blockbuster to be
commemorative recouped from
stamp surcharge
revenue
Stamp design $40,000 $40,000
Shipping to $0a $0a
stamp
distribution
offices/stam
p
distribution
networks
Printing and $2,100,00 $2,100,000
manufacturin 0
g
Training $612,000 $612,000
Rural $0b $0b
training
Reprogrammin $352,000 $176,000c $176,000c, d
g window
automation
devices
Posting to $0a $0a
cashbook
(nonintegrat
ed retail
terminal)
Inventory $0a $0a
costs
Destruction $0a $0a
costs
Market $56,000 $56,000
research
Flyer cost $231,000 $231,000
Advertising $1,505,00 $1,505,000
and 0
promotion
Postage to $0a $0a
Post Offices
Customer $7,000 $7,000d
receipts
Packaging $989,000 $950,000e $39,000e
for self-
service
Vending $0b $0b
machine
training
costs
Vending $7,000 $7,000
machine
reconfigurat
ion
Legal fees $22,000 $22,000d
Total $5,921,00 $5,439,000 $482,000
0
aThe Service considers these costs to be minimal
and does not track them.
bRural training and vending machine training costs
are included in the cost item labeled training.
cAutomated download did not work and changes had
to be manually loaded. Because of this problem,
one-half of the reprogramming cost was charged to
the BCRS, and the remaining one-half was
categorized as common to a blockbuster
commemorative stamp.
dThese costs had been recouped from the BCRS'
surcharge revenue as of December 31,1999.
eThe cost of including a receipt in shrink-wrapped
and cellophane stamp holders was determined to be
unique to the BCRS. The remaining cost was
determined to be common to a blockbuster
commemorative stamp.
Source: U.S. Postal Service.
We reviewed the Service's application of its
criteria to all of the cost items it is tracking.
In the course of our review, we found three
instances, totaling $1,019,000, where the Service
did not consistently apply its criteria.
The first instance involved the $612,000 spent on
training. Although postal officials acknowledged
that the training in question was unique to the
BCRS, they decided the costs should be considered
part of routine operations covered by the 33-cent
First-Class postage rate. They acknowledged that
training has not been provided for other
commemorative stamps, including blockbusters.
However, they explained that their decision not to
recoup the cost of training was influenced by
their belief that the BCRS is similar to a new
postal product, and postal employees receive
training on all new products. The officials stated
that the training provided on the BCRS took about
15 or 20 minutes to complete and was similar to
the training provided on any new product. The
officials said that had the training for the BCRS
been more substantive, they would have decided to
recoup the cost from the BCRS' surcharge revenue.
The second instance involved the $176,000 spent on
reprogramming window automation devices that the
Service decided not to recoup from the surcharge
revenue. The Service acknowledged that none of the
total $352,000 associated with reprogramming
window automation devices would have been spent
had it not been for the BCRS. However, the Service
stated that because it ran into an unexpected
computer reprogramming problem, which it considers
to be its fault, it decided not to charge all of
the reprogramming costs to the BCRS. Therefore,
the Service decided that it would recoup one-half
of the reprogramming costs from the surcharge
revenue. The Service said it considered the other
half to have been recovered through the 33-cent
First-Class postage rate.
The third instance involved the $231,000 spent on
flyers. The Service acknowledged that it does not
normally incur flyer costs with a blockbuster
commemorative stamp. Nevertheless, the Service had
initially decided that in the case of the BCRS, it
considered flyer costs to have been recovered
through the 33-cent First-Class postage rate and
therefore not to be recouped from the surcharge
revenue. After we had additional discussions with
the Service, officials agreed with us that the
$231,000 spent on flyers should be recouped from
the BCRS surcharge revenue. Postal officials told
us on March 16, 2000, that the Service plans to
recoup these costs from the surcharge revenue
before making the next transfers to NIH and DOD.
In the instances involving training and
reprogramming window automation devices, postal
officials said they stood by their decision not to
recoup these costs from the BCRS surcharge revenue
because they considered these costs to have been
recovered through the 33-cent First-Class postage
rate. However, postal officials provided no data
or analysis showing whether or how BCRS costs were
recovered through the 33-cent First-Class postage
rate. These data and analysis are key to both
establishing the appropriateness of the Service's
decision regarding those costs to be recouped from
the surcharge revenue and providing assurance that
postal rate payers who have not purchased the BCRS
are not involuntarily contributing funds to breast
cancer research.
Effectiveness of the BCRS as a Fund-Raiser
The Stamp Out Breast Cancer Act did not provide
quantitative measures for evaluating the
effectiveness of the BCRS as a fund-raiser.
However, the act provided that the BCRS would
provide the public a voluntary and convenient way
of raising funds for breast cancer research. To
these ends, the BCRS has been successful-it is
voluntary, convenient, and has raised millions for
breast cancer research.
Because the act did not provide quantitative
measures for evaluating the effectiveness of the
BCRS, and historic comparisons were not possible
because this is the first-ever U.S. semipostal, we
developed what we believe to be reasonable
measures of effectiveness. On the basis of the
results of those measures, we believe the BCRS has
been an effective fund-raiser.
First, as provided by the act, the BCRS has raised
money for breast cancer research and at the same
time has been voluntary and convenient. Second,
key stakeholders, for the most part, viewed the
BCRS as an effective fund-raiser. Third, the
public's view of the BCRS was generally positive;
and a majority of the adults responding to our
public opinion survey expressed a desire to see
more semipostals in the future for other special,
nonpostal purposes. Finally, the BCRS'
performance, compared to foreign semipostals, was
mixed. The average monthly surcharge revenue
generated by the BCRS compared favorably with the
foreign semipostals included in our survey,
although it did not raise as much money as most
foreign semipostals on a per capita basis.
The BCRS Is Voluntary and Convenient, and It Has
Raised Millions for Research
The BCRS is voluntary and convenient, and it has
raised millions of dollars for breast cancer
research. As provided for by the act, purchasing
the BCRS is to be voluntary and convenient. The
BCRS is voluntary in that postal patrons may
choose to purchase the BCRS for First-Class
postage at 40 cents or purchase any of the
Service's other, non-semipostal First-Class stamps
at 33 cents. The BCRS is convenient in that it is
widely available-e.g., it is to be available for
purchase at all post offices and postal stores,
from rural carriers and some postal vending
machines, and at some special events.
Additionally, our public opinion poll, conducted
by ICR, showed that an estimated 68 percent of
adults 18 years of age or older in the United
States viewed semipostals as a convenient way to
contribute to designated causes.
Also, as envisioned by the act, the BCRS has
raised money for breast cancer research. As of
December 31, 1999, 144.8 million BCRSs had been
sold-generating $10.8 million in surcharge
revenue. The Postal Service projects that by the
time sales are scheduled to end on July 28, 2000,
about 194.8 million BCRSs will have been
sold-generating about $14.3 million in surcharge
revenue. In accordance with the act, the surcharge
revenue generated by the BCRS, less the Postal
Service's reasonable costs, is to be transferred
to NIH and DOD for breast cancer research.
Transfers of Surcharge Revenue to NIH and DOD for
Breast Cancer Research
The act specifies that after deducting its
reasonable costs, the Service is to transfer 70
and 30 percent of the remaining surcharge revenue
generated by the BCRS to NIH and DOD,
respectively. The act further specifies that such
transfers are to be made at least twice yearly
under arrangements as agreed to between the
Service and those agencies. The specifics
regarding these transfers are contained in
Memorandums of Understanding (MOU) signed by NIH,
DOD, and Postal Service officials. Under the MOUs,
the Postal Service will make five transfers to NIH
and DOD at specified times. To date, the Service
has complied with the requirements in the act and
MOUs regarding the transfers of surcharge revenue
to NIH and DOD for breast cancer research.
Table 3 shows, as of December 31, 1999, the three
transfers that have been made since the BCRS was
issued in July 1998.
Table 3: Transfers Made to NIH and DOD for Breast
Cancer Research as of December 31, 1999
Date of Amount Amount Total
transfer transferred transferred transferred
to NIH to DOD to NIH and
(dollars in (dollars in DOD (dollars
millions) millions) in millions)
November 2, $1.9 $0.8 $2.7
1998
April 15, 2.3 1.0 3.3
1999
November 1, 1.9 0.8 2.7
1999
Total $6.1 $2.6 $8.7
Source: U.S. Postal Service.
The fourth transfer is to be made on or before
April 15, 2000. This transfer to NIH and DOD, per
the MOUs, will be 50 percent of the surcharge
revenue available at that time. A final transfer,
which is intended to include the available balance
(i.e., surcharge revenue less reasonable costs) in
connection with the fourth transfer, as well as
any other amounts that are available, is to be
made within 120 days after stamp sales are
scheduled to end on July 28, 2000.
As of December 31, 1999, the Service had recouped
$205,000 from the surcharge revenue generated by
the BCRS to cover certain costs associated with
developing and selling the BCRS. The Service did
not recoup any of its costs before making the
November 2, 1998, transfers to NIH and DOD.
However, the Service recouped $183,000 from the
BCRS' surcharge revenue before making the second
transfers to NIH and DOD. The $183,000 was to
cover the cost of printing customer receipts and
one-half of the cost associated with reprogramming
window automation devices. The Service also
recouped $22,000 for legal expenses before making
the third transfers. The Service plans to recoup
$277,000 before making final transfers to NIH and
DOD to cover the costs of reconfiguring vending
machines, flyers, and including a receipt in
shrink-wrapped and cellophane stamp holders. The
total amount of costs recouped as of December 31,
1999, plus the additional $277,000, totals
$482,000.
Key Stakeholders Believe the BCRS Has Been an
Effective Fund-Raiser
The key stakeholders we talked with that expressed
a view regarding the effectiveness of the BCRS
believed it had been effective in raising funds
for breast cancer research. Some of the
stakeholders that chose not to express a view on
the effectiveness of the BCRS offered other
comments concerning semipostals.
Key Stakeholders That Expressed the View That the
BCRS Has Been an Effective Fund-Raiser
Key stakeholders expressing the view that the BCRS
was an effective fund-raiser included the Postal
Service, the Susan G. Komen Breast Cancer
Foundation, and Dr. B. I. Bodai.
According to postal officials, a number of
indicators support the Service's belief that the
BCRS has been an effective fund-raiser. First, and
most notably, is the estimated $14.3 million in
surcharge revenue that the BCRS is expected to
generate. Second are the additional printings of
the BCRS that had to be done based on inventory
reductions at the stamp distribution offices.
Third is the Gold "REGGIE" award the Service
received from the Promotion Marketing Association
for its efforts in promoting the BCRS. Fourth is
the fact that sales of the BCRS compare favorably
with the sales of some of the Service's most
popular commemorative stamps.
Dr. B. I. Bodai and the Susan G. Komen Breast
Cancer Foundation also believe the BCRS has been
an effective fund-raiser. The Susan G. Komen
Breast Cancer Foundation stated that the BCRS has
been an effective program because it has been a
unique and innovative fund-raising tool and has
enhanced breast cancer awareness on a global
scale. Dr. Bodai believes the BCRS has been an
effective fund-raiser primarily on the basis of
the amount of money the BCRS raised for breast
cancer research. However, Dr. Bodai stated that
BCRS sales would have been even higher had the
Postal Service and breast cancer organizations
promoted it more heavily.
Comments Made by Other Key Stakeholders on
Semipostals as Fund-Raisers
The National Breast Cancer Coalition (NBCC)
believes there are more effective ways of raising
money for research than using semipostals. NBCC
believes that effectively lobbying Congress holds
the most promise for raising significant amounts
of research money. NBCC officials were also
concerned (1) that the BCRS' administrative and
advertising costs could be high in relation to the
total surcharge revenue generated by the BCRS, (2)
about how the Service would treat BCRS
administrative and advertising costs, and (3)
about whether future semipostals would be treated
the same way.
American Cancer Society officials said it is too
early to label the BCRS as either effective or
ineffective. The officials said their primary
concern has always been that funds generated by
the BCRS should never be used to supplant
appropriated dollars for breast cancer research.
The officials said they support the BCRS as long
as it does not take momentum away from federal
funding for breast cancer research or adversely
affect fund-raising organizations' ability to
raise research funds. The officials said they have
seen no evidence, to date, to suggest that any of
these concerns have materialized.
The Curator of the Smithsonian Institution's
National Philatelic Collection said semipostals
are effective fund-raisers in many European
countries, and he sees no reason why that
experience cannot be duplicated within the United
States. He believes that the Service, by
participating in fund-raising activities, enhances
its public image.
The American Philatelic Society does not believe
the true cost of the BCRS will ever be known;
therefore, it believes that any evaluation of
effectiveness will always be subjective, at best.
The Society does not believe the Service is
equipped to track all of the costs associated with
developing and selling the BCRS. Although the
Society actively supports breast cancer research,
it is opposed to semipostals regardless of the
cause. It views semipostals as a tax on its
members' hobby.
Survey Respondents View Semipostals in a Positive
Light
To determine the public's awareness of the BCRS
and its view of semipostals in general, we
included pertinent questions in our survey of
adults 18 years of age or older in the continental
United States, which was conducted by ICR.
Although most respondents to our public opinion
poll were not aware of the BCRS 1 year after it
was issued, the public, in general, viewed
semipostals in a positive light.
About 24 percent of the survey participants
responded that they were aware of the BCRS prior
to our inquiry-which occurred 1 year after it was
issued. About 29 percent of the female and about
18 percent of the male respondents were aware of
the BCRS.
Most respondents were enthusiastic about
semipostals in general. About 65 percent of the
survey respondents said they would like to see the
Postal Service issue, on a recurring basis, more
semipostals to raise money for other special,
nonpostal purposes.
The BCRS Compared Favorably With Foreign
Semipostals in Some, But Not All, Respects
The average monthly surcharge revenue generated by
the various semipostals included in our survey
varied considerably. In terms of the average
monthly surcharge revenue generated, the BCRS
raised more money for its designated beneficiary
than most of the foreign semipostals that provided
us information. However, when the population size
of the host country was factored into the
analysis, the BCRS' monthly surcharge revenue, per
million population, was less than the surcharge
revenue generated by most of the other
semipostals. In terms of the percent of total
surcharge revenue generated that was transferred
to the semipostal's designated beneficiary, the
BCRS, as of December 1999, compared favorably with
the foreign semipostals.
Comparison of Sales of BCRS With Foreign
Semipostals
In terms of average monthly surcharge revenue
generated, the BCRS outperformed 7 of the 12
foreign semipostals for which we received
information. However, when the monthly sales data
were adjusted to account for differences in
population size of the host country, the BCRS did
not fare as well as most of the other semipostals.
The BCRS outperformed the four semipostals issued
by the postal administrations in Canada and
Belgium but did not perform as well as the eight
semipostals issued by the postal administrations
in Austria, New Zealand, The Netherlands, and
Germany. The results of this analysis are shown in
table 4, with the semipostals ranked from highest
to lowest in terms of average monthly surcharge
revenue per million population.
Table 4: Average Monthly Surcharge Revenue
Generated and Average Monthly Surcharge Revenue
per Million Population for the 13 Semipostals
Included in Our Survey
Host Average Population Average
countrya / monthly of host monthly
semipostal surcharge country (in surcharge
revenueb millions) revenue per
million
populationc
Austria/Phil $509,622 8.1 $62,916
ately
The 980,569 15.7 62,457
Netherlands/
Children
Germany/Yout 1,475,935 82.1 17,977
h
Germany/Welf 1,328,065 82.1 16,176
are 1
Germany/Welf 1,101,432 82.1 13,416
are 2
Germany/Spor 1,031,722 82.1 12,567
ts
The 128,976 15.7 8,215
Netherlands/
Elderly
New Zealand/ 10,678 3.8 2,810
Children's
Health
U.S./Breast 684,644 274.0 2,499
Cancer
Research
Belgium/Phil 17,844 10.1 1,767
ately
Belgium/Spor 16,144 10.1 1,598
ts
Canada/Liter 48,773 30.6 1,594
acy
Belgium/Soli 4,390 10.1 435
darity
aThe United Kingdom and Sweden did not provide
sales data on their semipostals but reported sales
were low.
bAfter converting sales data reported in foreign
currencies to U.S. dollars and adjusting the data
to 1999 dollars, we computed the average monthly
surcharge revenue generated for each semipostal by
dividing its adjusted sales data by the number of
months covered by the reported sales (i.e., if the
reported sales were generated over a 12-month
period we divided the adjusted sales data by 12).
We used the first 12 months of sales for the BCRS
for comparison purposes because none of the
foreign postal administrations reported sales
covering a period longer than 12 months. We made
the conversions in November 1999 using the
exchange rates for the relevant years from the
Federal Reserve Bulletin and adjusted to 1999
dollars using the Gross Domestic Product (GDP)
price index from the Department of Commerce.
cTo compute the average monthly surcharge revenue
per million population, we divided the adjusted
average monthly surcharge revenue generated by the
1998 population of the host country as reported by
the Population Division, Department of Economic
and Social Affairs, United Nations.
Source: Selected postal administrations, United
Nations, and GAO calculations.
In comparing the performance of semipostals, we
recognize that the population size of the host
country is not the only factor that affects sales.
Other factors, such as tradition, the subject
matter of the semipostal and its beneficiary, the
method used to promote sales, the amount of the
surcharge, sales techniques, and other factors may
also influence how well a particular semipostal
sells. For example, The Netherlands had two
semipostals-one to benefit children and the other
to benefit the elderly. The sales methods differed
greatly for these two semipostals. Although both
semipostals were sold in post offices, school
children also sold the children's semipostal door-
to-door. The result was that the average monthly
sales of the semipostal for children were seven
times greater than sales of the semipostal for the
elderly. We were not able to adjust the data to
account for such differences as sales techniques;
however, in appendix II, we discuss factors that
might affect sales of semipostals.
Percent of Total Surcharge Revenue Turned Over to
Designated Beneficiary for the Semipostals
Included in Our Survey
Thus far, the BCRS compares favorably with the
foreign semipostals included in our survey in
terms of the percent of total surcharge revenue
turned over to the designated beneficiary after
the costs borne by the semipostal for its
development and sale are deducted. For the 13
semipostals included in table 4, the percentages
ranged from a low of 71.51 to 100 percent. Two
postal administrations-Canada and New Zealand-did
not withhold any surcharge revenue to recover
costs. To date, the U.S. Postal Service has
recouped 2.33 percent of the surcharge revenue
generated by the BCRS to cover certain costs.
Table 5 shows the percent of surcharge revenue
that the postal administrations reported
transferring to designated beneficiaries, ranked
from highest to lowest.
Table 5: Percent of Total Surcharge Revenue
Reported as Being Transferred to the 13
Semipostals' Designated Beneficiaries
Host countrya/semipostal Percent of total
surcharge revenue
transferred to designated
beneficary
New Zealand/Children's 100.00
Health
Canada/Literacy 100.00
Germany/Youth 98.00
Germany/Welfare 1 98.00
Germany/Welfare 2 98.00
Germany/Sports 98.00
U.S./Breast Cancer 97.67b
Research
The Netherlands/Children 93.85
The Netherlands/Elderly 85.00
Belgium/Philately 80.30
Belgium/Sports 79.64
Belgium/Solidarity 75.89
Austria/Philately 71.51
aThe United Kingdom and Sweden did not provide
data on the percentage of surcharge revenue
withheld to cover costs.
bThis percentage was based on the transfers made
to NIH and DOD and the amounts deducted from the
BCRS' surcharge revenue as of December 31,1999.
Source: U.S. Postal Service and foreign postal
administrations that responded to GAO survey.
Foreign Postal Administrations Had Differing Views
on the Effectiveness of Semipostals as Fund-
Raisers
The foreign postal administrations included in our
survey differed in their views on the
effectiveness of their semipostals as fund-
raisers. Five of the eight foreign postal
administrations responding to our request for
information considered semipostals to be effective
fund-raisers, and three did not. Postal
administrations in Belgium, Germany, The
Netherlands, New Zealand, and Sweden rated
semipostals as either very effective or somewhat
effective fund-raisers. Postal administrations in
Austria, Canada, and the United Kingdom rated
semipostals as either very ineffective or somewhat
ineffective fund-raisers. Those rating semipostals
as ineffective generally attributed the reasons to
public and postal employee dislike of semipostals.
In general, they said the public does not like to
pay more for a stamp than necessary, especially
when there is no option as to the recipient of the
surcharge. They reported that some postal
employees dislike semipostals because they have to
deal with the negative public reactions to
semipostals. Although the Austrian postal
administration considers semipostals to be very
ineffective fund-raisers because of opposition
from philatelists, it continues to issue them
annually at the direction of its legislative body.
Sweden, on the other hand, considers semipostals
to be somewhat effective fund-raisers but decided
not to issue any more semipostals because of
negative public reaction.
Appropriateness of Using Semipostals as a Means of
Fund-Raising
The appropriateness of using semipostals as a
means of fund-raising has been somewhat
controversial. The Postal Service has,
historically, been opposed to raising revenue for
purposes other than the maintenance of the mail
delivery system. In a 1997 letter to a Member of
Congress, former Postmaster General Marvin Runyon
stated his belief that issuing a special "hybrid"
stamp to raise money for breast cancer research
would ".open the floodgates for all worthy social
causes." Since the act was passed, there have been
eight additional bills calling for semipostals to
raise funds for special, nonpostal purposes. Thus
far, none of these bills have been enacted into
law. According to postal officials, the Service
supports the BCRS and is striving to make it a
success. However, the officials said the Service
remains, in principle, opposed to issuing any more
semipostals to raise money for special, nonpostal
purposes.
Although the Service is generally opposed to
semipostals, the public and most of the key
stakeholders we spoke with believed that it was
appropriate for the Service to issue the BCRS.
They also believed that it was appropriate for the
Service to issue other semipostals in the future
to raise funds for special, nonpostal
purposes-although there are some who do not share
that opinion. Stamp collectors, for example,
generally oppose semipostals, viewing them as an
additional tax on their hobby. The eight foreign
postal administrations that responded to our
survey were evenly split regarding whether or not
it is appropriate for their countries to use
semipostals to raise funds for nonpostal purposes.
The Stamp Out Breast Cancer Act gave the Postal
Service specific authority to issue the BCRS.
However, we do not believe that the Postal Service
has the authority to issue the BCRS, or any other
semipostal, on its own volition without specific
legislation authorizing it to do so.
Opinions of the Postal Service, Key Stakeholders,
and Others Regarding Appropriateness
The Postal Service stated that although it
supports the BCRS, it is opposed, in principle, to
using the Service to raise funds for special,
nonpostal purposes. Consequently, postal officials
said that as a general rule, they are opposed to
semipostals.
Our public opinion survey indicated that most
respondents believed it was appropriate for the
Postal Service to issue semipostals, as did most
of the key stakeholders we spoke with. There were,
however, some that opposed semipostals. The
foreign postal administrations that responded to
our survey were evenly split on the question of
the appropriateness of their countries using
semipostals to raise funds for special, nonpostal
purposes.
Views of Postal Service and Other Key Stakeholders
The Postal Service has, historically, opposed
semipostals. Its position has been that because
the United States already had a philanthropic
tradition unmatched by other nations, semipostals
would be perceived as yet another solicitation and
a public intrusion in an area where private
initiative and generosity have had very beneficial
results. Further, the Service believed that if it
were required to routinely issue semipostals, it
might be placed in the difficult, uncomfortable
position of determining which organizations should
have a semipostal and which should not.
Initially, the Postal Service strongly opposed
legislation directing it to issue the BCRS. Its
position was that its basic mission is universal
mail service, and it would be inappropriate for it
to raise revenue for purposes other than the
maintenance of a national mail delivery system. As
noted by former Postmaster General Marvin Runyon
in a 1997 letter to a Member of Congress, the
Service feared that a semipostal breast cancer
research stamp ".would open the floodgates for all
worthy social causes.and that in very short order,
(it) would find itself devoting considerable time
and expense as a fund raiser." The Service did not
believe that was its role and did not think it
should be.
Nevertheless, postal officials told us that
because Congress expressed itself so strongly
through the Stamp Out Breast Cancer Act, the
Service decided to enthusiastically support and
promote the BCRS program. However, the officials
stated that the Service's position on semipostals,
in principle, remains the same. The Postmaster
General (PMG) stated, in commenting on a draft of
this report, that the Service will continue to
enthusiastically promote the BCRS throughout the
remainder of the sales period, and the Service has
been pleased and gratified by the success of the
BCRS in raising funds for breast cancer research.
Nevertheless, he stated that it remains the
Service's position that Congress should not, at
this time, enact legislation mandating additional
semipostal stamps. He cited three reasons for the
Service's position. First, the Service believes
that fund-raising through the sale of semipostals
is an activity outside the scope of the Service's
mission as defined by the Postal Reorganization
Act. Second, the popularity of the BCRS does not
ensure the success of future semipostals, and it
is possible that future semipostals might generate
only modest amounts of revenue while still
requiring substantial postal expenditures. Third,
enacting legislation creating more semipostals
would put Congress in the difficult position of
having to choose, from among many worthy causes,
which organizations would get a semipostal stamp.
Regardless of the Postal Service's general
position against semipostals, however, since the
act was passed, eight additional bills have called
for special semipostals to raise funds for (1)
AIDS research and education, (2) Alzheimer's
disease research, (3) diabetes research, (4)
domestic violence programs, (5) emergency food
relief within the United States, (6) highway-rail
grade crossing safety, (7) organ and tissue
donation awareness, and (8) prostate cancer
research. Thus far, none of these bills have been
enacted into law.
Most of the other key stakeholders we spoke with
believed that it was appropriate for the Postal
Service to issue the BCRS and that it would be
appropriate for the Service to issue other
semipostals in the future to raise funds for
special, nonpostal purposes. However, there were
some stakeholders who did not share that opinion.
The American Cancer Society supported the Stamp
Out Breast Cancer Act and did not believe it to be
inappropriate for the Postal Service to issue the
BCRS. Society officials stated that the Society
has participated with the Postal Service at
several fund-raising events where the BCRS was
promoted and has used the BCRS to mail some of its
own correspondence. The officials also noted that
in December 1998, the Society and Senator Dianne
Feinstein sent a joint letter to Fortune 1000
companies encouraging them to promote the BCRS.
The only concern the officials expressed about the
BCRS was that Congress not use revenues from it to
supplant appropriations to NIH and DOD for breast
cancer research-even though the act stated that it
was the sense of Congress that enactment of the
Stamp Out Breast Cancer Act should not cause this
to happen. The officials felt strongly that the
surcharge revenue from the BCRS should be used to
supplement, not supplant, appropriations for
breast cancer research.
The Susan G. Komen Breast Cancer Foundation
believed the BCRS was appropriate and fully
supported it. The Foundation stated that
eradicating breast cancer should be a national
priority and will take a collaborative effort
between public and private stakeholders. It felt
that the BCRS was a good example of a public
initiative with widespread public support.
Dr. B.I. Bodai believed that using semipostals for
worthy, nonpostal causes-such as breast cancer
research-is very appropriate. Dr. Bodai stated
that using a public organization, such as the
Postal Service, to help raise funds for research
to eliminate diseases, such as breast cancer, is
an example of what good government is all about.
The Curator of the Smithsonian Institution's
National Philatelic Collection said he believed
that legislation directing the Postal Service to
issue the BCRS was very appropriate. He said the
BCRS was good for the Nation, good for NIH and
DOD, and good for the Postal Service in that it
helps bolster the public's opinion of the Service.
He cautioned, however, that other charities would
soon be asking Congress for semipostals, possibly
leading to a wave of new legislation. He suggested
that one possible solution to control and deal
fairly with this situation would be to have the
Postal Service's Citizen's Stamp Advisory
Committee select one applicant per year for a
semipostal.9
NBCC reserved judgment on the appropriateness of
the BCRS. Although NBCC did not take an official
position on the legislation creating the BCRS,
NBCC officials said that at the time the
legislation was being considered, NBCC had some
reservations. For example, some members of NBCC's
Board of Directors were concerned that Congress
might substitute revenues from the BCRS for
appropriations for breast cancer
research-especially appropriations to DOD. Some
Board Members were also concerned that the BCRS
might be more of a symbolic gesture, on Congress'
part, than an all-out commitment to fund whatever
research is needed to eradicate breast cancer in
the shortest possible time.
The president of the American Philatelic Society
stated that the Society fully supports efforts to
raise money for breast cancer research but opposes
the use of semipostals. In a July 30, 1997, letter
to President Clinton, the former president of the
Society encouraged the President to veto the
legislation creating the BCRS. The letter
acknowledged the Society's full support of efforts
to promote breast cancer awareness and noted that
the Society had recently teamed with a breast
cancer organization to raise funds for breast
cancer research. However, the letter went on to
explain that the Society's objections to
semipostals have nothing to do with opposition to
worthwhile charitable causes, but to what the
Society's members see as a tax that falls
disproportionately and unfairly on their hobby.
The American Philatelic Society also opposed the
BCRS because it believed that allowing even one
semipostal to be issued would establish a
precedent and that many more semipostals would
follow. The president of the American Philatelic
Society said he was particularly concerned that
the BCRS not usher in a return to the days before
the creation of the Citizens' Stamp Advisory
Committee, when the content of the American stamp
program was heavily influenced by the political
process through congressional direction of stamp
subjects. However, he said that if a fair process
could be designed in which no more than two
semipostals would be chosen per year, he believed
stamp hobbyists could live with that process.
Finally, the Society was concerned that the Postal
Service might not have an efficient system for
tracking the administrative costs associated with
developing and selling semipostals. It believed
that if the Postal Service were unable to
accurately identify and fully recoup its
administrative costs, those costs would be, in
effect, subsidized by postal patrons. The Society
believes that as a matter of principle, American
stamp collectors prefer to make their own choices
about charities to which they give their money.
The Public's View
The ICR survey indicated that an estimated 71
percent of adults 18 years of age or older in the
continental United States believe it is
appropriate to use semipostals issued by the
Postal Service, such as the BCRS, to raise funds
for nonpostal purposes. Twenty-six percent of
respondents thought it was somewhat inappropriate
or very inappropriate. The remaining 3 percent had
no opinion, said they didn't know, or said it
would depend on the cause for which the semipostal
was being used to raise money.
Of those respondents who thought it inappropriate
for the Postal Service to issue semipostals, 40
percent said the Postal Service/federal government
shouldn't be doing fund-raising. Eighteen percent
thought people should contribute to a charity of
their own choosing. Fifteen percent were not sure
funds raised by a semipostal would be distributed
appropriately or to the charities most in need.
Nine percent thought the Postal Service should not
issue semipostals because postage is already
expensive enough. The remaining respondents who
did not think the Postal Service should be issuing
semipostals offered varying reasons, such as (1) a
concern that the elderly would be confused or
misled by semipostals and (2) a belief that
research should be conducted through government
grants or other means besides semipostals.
Foreign Postal Administrations' Views
The eight foreign postal administrations that
responded to our survey were evenly split on the
question of the appropriateness of their countries
using semipostals to raise funds for special,
nonpostal purposes. The postal administrations of
Germany, The Netherlands, Belgium, and New Zealand
believed that it is appropriate to use semipostals
to raise funds for nonpostal purposes. Conversely,
the postal administrations of Austria, Canada, the
United Kingdom, and Sweden believed it was
inappropriate to use semipostals to raise funds
for nonpostal purposes. (See table 6.)
Table 6: Appropriateness of Semipostals
"Based on your postal administration's experience, how appropriate or
inappropriate is it to use semipostal stamps to raise funds for nonpostal
purposes?"
Foreign postal Very Somewhat Neither Somewhat Very
administration appropriatappropropria appropriate inappropri inappropria
e te nor ate te
inappropriate
Austria
Belgium
Canada
Germany
United Kingdom
The Netherlands
New Zealand
Sweden
Source: Foreign postal administrations that
responded to GAO survey.
The United Kingdom and Sweden have permanently
discontinued the sales of semipostals, and Canada
does not currently have any semipostals for
sale-although it has not ruled out selling them at
some future date. The United Kingdom and Sweden
both noted that semipostals were discontinued
because they were not popular with the public or
the postal administration. The Canadian postal
administration believed it to be inappropriate to
sell semipostals because Canadians are resistant
to paying more for stamps and would rather give
directly to charities of their choice. Austria's
postal administration believed it to be
inappropriate to sell semipostals because
philatelists consider the surcharge to be a tax on
their hobby. Nevertheless, the Austria postal
administration continues to sell semipostals at
the direction of its legislative body.
Statutory Authorities and Constraints
The Postal Service had clear, specific statutory
authority to issue the BCRS under the Stamp Out
Breast Cancer Act. However, to help address the
issue of the appropriateness of using the Service,
and semipostals in general, as a means of fund-
raising, we reviewed the Service's underlying
legal authority to carry out its mission. In
addition, we requested the views of the Service on
this matter.
There is no express legal authority for the
Service to issue semipostals or to conduct its
operations for charitable fund-raising purposes
other than under the Stamp Out Breast Cancer Act.
The Service stated that it undoubtedly has the
authority to sell stamp products with retail
prices exceeding their postage or face value.
However, the Service further stated that it is
unclear whether it has the authority to sell a
particular stamp with a retail price exceeding its
postage value and designate the differential
revenue for charitable purposes. We do not believe
that the Service's enabling legislation can be
interpreted as providing the Service with such
authority in the absence of express statutory
authority for it to do so.
Under section 404 of Title 39 of the United States
Code, the Postal Service has broad authority to
"provide and sell postage stamps" and to "provide
philatelic services." According to the Postal
Service, section 404 provides the Service with the
authority to issue stamp products at any given
value, regardless of the applicable First-Class
Mail rate, and to sell stamp products with a
retail price exceeding their postage or face
value. This is the case with philatelic products
and stamped cards, e.g., a post card with a BCRS
cancelled on the first day of issue.
In the absence of express statutory authority to
issue semipostals, the Postal Service states that
it is unclear whether selling a particular stamp
with a retail price exceeding its postage value,
and making a firm representation to the public
that the "differential"/surcharge revenue would be
donated to a charitable cause, would be consistent
with 39 U.S.C. 3621. Section 3621 provides that
postage rates and fees "shall provide sufficient
revenues so that the total estimated income and
appropriations to the Postal Service will equal as
nearly as practicable total estimated costs of the
Postal Service." According to the Postal Service,
it is unclear whether the Service could, in
advance of the close of a given fiscal year,
publicly commit to setting aside a portion of the
revenues from the sale of a particular semipostal
for charitable purposes, particularly if the
Service's other operating expenses exceed
operating revenues in a given year.
In our view, the Service does not have the
authority to issue semipostals in the absence of
specific authorizing legislation. Under 39 U.S.C.
3261, rates of postage the Postal Service is
authorized to charge should "equal as nearly as
practicable the total estimated costs of the
Postal Service." That language is not consistent,
in our view, with setting postage rates for a
particular stamp at an amount that is intended to
generate excess revenues that would be used for
charitable purposes.
Further, the Service's authority under 39 U.S.C.
401 (3) to "determine the character of, and
necessity for, its expenditures" does not in our
view provide it with the authority to make
charitable contributions. Although such authority,
similar to the authority often provided to
government corporations, may provide the Postal
Service with greater discretion than is provided
to ordinary executive branch agencies, such
discretion is not unlimited. In the absence of
specific authority to make charitable
contributions, the Postal Service can only do so,
in our view, if it can reasonably determine that
such contributions are a necessary expense to help
it perform its statutory mission. The Postal
Service has not made such an argument, nor are we
aware of any possible basis to support the view
that making charitable contributions would help
the Service carry out its mission.
Conclusions
The Stamp Out Breast Cancer Act did not provide
quantitative measures for evaluating the
effectiveness of the BCRS as a fund-raiser. The
act provides that the BCRS would be convenient and
voluntary and would raise money for breast cancer
research. On the basis of the fact that the BCRS
has successfully met these three measures and
generally met the additional measures we developed
to evaluate effectiveness, we would conclude that
overall, the BCRS has been an effective fund-
raiser. Additionally, the public and most key
stakeholders we spoke with believed that it was
appropriate to use semipostals issued by the
Postal Service to raise funds for nonpostal
purposes.
The act required that the Service prescribe
regulations setting forth the criteria it would
use to determine the reasonable costs to be
recouped from the BCRS' surcharge revenue. The act
provided the Service flexibility to accomplish
this task and did not specify a date by which the
regulations should be issued.
We are concerned that the Service has not clearly
articulated the criteria to be applied in deciding
what costs it would recoup from the surcharge
revenue. As of March 2000, the Service had not
issued formal, written criteria to determine which
of the BCRS costs it was tracking would be
recouped from the surcharge revenue as
contemplated by the act. The Service's informal
criteria for determining the costs to be recouped
from the surcharge revenue have evolved over time
and have not been consistently applied. For
example, the latest informal criteria the Service
used were the costs normally incurred with a
blockbuster commemorative stamp for the 18 cost
items. However, the Service deviated from its
criteria when it decided not to recoup all of the
costs unique to the BCRS from the surcharge
revenue. Rather, the Service has said that it will
recoup $482,000 from the surcharge revenue.
Although postal officials said they considered all
other costs to have been recovered through the 33-
cent First-Class postage rate, they provided no
data or analysis showing that these costs have
been recovered. Understanding what criteria the
Service is applying as well as the data or
analysis underlying its recovery decisions are key
to establishing the appropriateness of the
Service's decision regarding those costs to be
recouped from the surcharge revenue. Moreover,
this information is essential to providing postal
rate payers, who have not purchased the BCRS,
assurance that they are not involuntarily
contributing funds to breast cancer research.
We recognize that the act provides the Service
with the discretion to establish reasonable
criteria for determining the BCRS costs to be
recouped from the surcharge revenue. However,
until such time that the Service prescribes
formal, written criteria and consistently applies
those criteria to all BCRS costs, it is difficult
for Congress, us, and others to evaluate how well
the Service is implementing its legislative
mandate to recoup reasonable costs. The Service's
failure to prescribe formal, written criteria also
makes it difficult for Congress to determine
whether it believes the Service's criteria are
appropriate. The need to prescribe formal, written
criteria as soon as possible is particularly acute
given that the Service's actions are potentially
precedent-setting, and eight bills have been
introduced in Congress that would mandate
additional semipostals. Each of those bills
contains the same language as the BCRS act about
recouping reasonable costs.
Matters for Consideration by Congress
If Congress decides that the Postal Service is not
recouping its reasonable costs associated with the
BCRS, Congress may wish to consider (1) amending
the Stamp Out Breast Cancer Act to specify any
additional costs associated with the BCRS that the
Postal Service must recoup, and (2) in any future
semipostal legislation, specifying the explicit
criteria the Service should use in determining
costs to be recouped from the semipostal's
surcharge revenue.
Recommendations
We recommend that the Postmaster General
� promptly issue regulations that clearly state
the Service's criteria for determining which costs
are to be recouped from the BCRS surcharge revenue
and ensure that the criteria are consistently
applied to all cost items associated with the
BCRS, and
� direct postal management to make available
the data and analysis showing which BCRS costs
have been recovered through the 33-cent First-
Class postage rate to provide assurance that
postal ratepayers are not involuntarily
contributing funds to breast cancer research.
Agency Comments and Our Evaluation
In commenting on a draft of this report, in a
letter dated April 11, 2000, the PMG stated that
the Service concurred with the report's findings
and recommendations. In responding to our
conclusion that the Service had not clearly
articulated the criteria to be applied in deciding
what costs it would recoup from the BCRS'
surcharge revenue, the PMG stated that it is the
Service's intent to recoup, from the surcharge
revenue, those costs that are over and above the
costs normally incurred with the development and
sale of blockbuster commemorative stamp issues or
new postal products. The PMG further stated that
the Service will issue final regulations
formalizing its cost recovery criteria by the time
BCRS sales are scheduled to end on July 28, 2000,
and will apply those criteria to all identified
BCRS costs before making the last transfers of
surcharge revenue to NIH and DOD. We believe these
actions, if properly implemented, should satisfy
our recommendation that the PMG promptly issue
regulations that clearly state the Service's
criteria for determining which costs are to be
recouped from the BCRS surcharge revenue and
ensure that the criteria are consistently applied
to all cost items associated with the BCRS.
Issuance of these criteria is particularly
important in view of the currently pending
legislative proposal to extend the sales period
for the BCRS.
In response to our recommendation that the Service
make available the data and analysis showing which
BCRS costs have been recovered through the 33-cent
First-Class postage rate, the PMG stated that the
Service intends to provide that information to its
congressional oversight committees within 60 days
after the end of the BCRS sales period. The PMG
noted that the Service's 1998 and 1999 Cost and
Revenue Analysis (CRA) reports, which contain data
that are audited annually and used as a basis for
the Service's rate cases, provide information on
the costs of items covered by the First-Class
postage rate. On the basis of discussions with the
Postal Service, however, we believe that the CRA
reports lack the specificity and detail to allow
interested parties to clearly see which BCRS costs
have been recovered through the 33-cent First-
Class postage rate. Although these reports may be
useful for making cost determinations regarding
First -Class postage in general, we are concerned
that they lack detailed cost information on a
stamp-by-stamp basis. Therefore, we believe that
any data and analysis the Service makes available
should be specific to the BCRS and sufficiently
detailed to allow interested parties to clearly
see which BCRS costs have been recovered through
the 33-cent First-Class postage rate.
The PMG stated that the Service will continue to
enthusiastically promote the BCRS throughout the
remainder of the sales period, and the Service has
been pleased and gratified by the success of the
BCRS in raising funds for breast cancer research.
Nevertheless, he stated that it remains the
Service's position that Congress should not, at
this time, enact legislation mandating additional
semipostals. He cited three reasons for the
Service's position. First, the Service believes
that fund-raising through the sale of semipostals
is an activity outside the scope of the Service's
mission as defined by the Postal Reorganization
Act. Second, the popularity of the BCRS does not
ensure the success of future semipostals, and it
is possible that future semipostals might generate
only modest amounts of revenue while still
requiring substantial postal expenditures. Third,
enacting legislation creating more semipostals
would put Congress in the difficult position of
having to choose, from among many worthy causes,
which organizations would get a semipostal.
We agree with the Postal Service that the sale of
semipostals is outside the scope of the Service's
mission as defined by the Postal Reorganization
Act. As discussed in our report, we do not believe
the Service has the authority to issue semipostals
on its own volition without specific legislation
authorizing it to do so. We also agree that the
success of the BCRS may not predict success for
other semipostal issues, and that choosing
beneficiaries for semipostals from among many
worthy causes will be difficult. Although these
concerns are valid, they need to be considered,
along with the potential benefits, as Congress
deliberates additional semipostals.
Although the Stamp Out Breast Cancer Act gave the
Service the specific authority to issue the BCRS,
it was silent with regard to the appropriateness
of the Service issuing additional semipostals for
other causes. However, we also discuss the views
of key stakeholders, including the public; and
most of the key stakeholders believe it is
appropriate to use semipostals issued by the
Service to raise funds for nonpostal purposes.
Since the BCRS was issued, eight bills have been
introduced to authorize additional semipostals.
The information in this report should be useful as
Congress deliberates these bills.
The PMG provided updated BCRS sales information as
of March 24, 2000, and stated that he concurred
with the matters identified in our report for
congressional consideration. He also stated that
Congress might wish to clarify its intent on the
tax-deductibility of the surcharge as a charitable
contribution by postal patrons by enacting
specific legislation for that purpose. His
comments are reproduced in appendix III.
We are sending copies of this report to
Representative Michael Bilirakis, Chairman, and
Representative Sherrod Brown, Ranking Minority
Member, Subcommittee on Health and Environment,
House Committee on Commerce; and to Representative
Christopher Shays, Chairman, and Representative,
Rod R. Blagojevich, Ranking Minority Member,
Subcommittee on National Security, Veterans'
Affairs, and International Relations, House
Committee on Government Reform because of their
involvement in the passage of the act. We are also
sending copies of this report to Senator Dianne
Feinstein and Representative Charles F. Bass
because of their expressed interest in the BCRS;
Mr. William J. Henderson, Postmaster General and
Chief Executive Officer, United States Postal
Service; Mr. Edward J. Gleiman, Chairman, Postal
Rate Commission; and other interested parties.
Copies will also be made available to others upon
request.
Staff acknowledgements are listed in appendix
IV. If you have any questions about this report,
please call me on (202) 512-8387.
Bernard L. Ungar
Director, Government Business
Operations Issues
_______________________________
1 A semipostal is a stamp sold at a surcharge over
postal value. The additional charge is for a
special purpose.
2 A commemorative stamp is a postage stamp that
depicts the cultural and historical heritage of
the United States; e.g., important people, events,
places, or special subjects of national appeal or
significance. A "blockbuster" commemorative is a
commemorative stamp that has mass appeal; garners
Postal Service support on a national level; and,
in most cases, will be highly retained by postal
patrons and not used for postage.
3 When the price of First-Class postage increased
to 33 cents on January 10, 1999, the Board of
Governors decided that the price of the BCRS would
remain at 40 cents.
4 H.R. 4069 and S. 2386 were introduced in
Congress on March 23, 2000, and April 11, 2000,
respectively, to extend the sales period for the
BCRS for 2 years.
5 These costs consisted of (1) some advertising
and promotion costs, (2) stamp design costs, and
(3) packaging costs.
6 Details of additional costs are included in
OIG's report (RG-AR-00-002) on the BCRS program,
dated March 31, 2000. BCRS costs reported by OIG
were about $65,000 more than what we reported.
This is due to differences in the cost items
included and opinions regarding which costs to
include in each cost item.
7 Under 39 CFR 211.2, the Service states that the
regulations of the Postal Service include the
Administrative Support Manual.
8 In a report on the BCRS dated Sept. 30, 1998,
OIG suggested to postal management that it
identify and define what constitutes reasonable
costs incurred in carrying out the act and develop
a policy that incorporates that definition.
9 The Citizens' Stamp Advisory Committee is a
group of individuals (nonpostal employees)
appointed by the Service to review suggestions for
postage stamp subjects and to recommend those
subjects to be adopted for postage stamps and
postal stationery. The Committee, which meets
several times a year, includes artists,
historians, educators, and philatelists with
backgrounds related to the subjects and stamp
designs.
Appendix I
Objectives, Scope, and Methodology
Page 39 GAO/GGD-00-80 Breast Cancer Research Stamp
Our objectives were to (1) describe the monetary
and other resources required by the Postal Service
to develop and sell the Breast Cancer Research
Semipostal (BCRS), (2) evaluate the effectiveness
of using the BCRS as a means of fund-raising, and
(3) evaluate the appropriateness of using the BCRS
as a means of fund-raising.
To describe the monetary and other resources
required by the Postal Service to develop and sell
the BCRS, we interviewed officials from the Postal
Service's Finance and Stamp Services divisions
responsible for the development and oversight of
the BCRS. We gathered and analyzed data on the
surcharge revenue raised by the BCRS as well as
data on the costs and resources the Service
required to develop and sell the BCRS. We also
reviewed information on BCRS costs and resources
included in the Postal Service Office of Inspector
General (OIG) 1998 report on the BCRS and included
this information, as appropriate. During the
course of our work, OIG concluded a follow-up
audit of the BCRS program. We reviewed OIG's
report and incorporated its findings where
appropriate.
To assess the accuracy of the financial data
provided by the Postal Service, we discussed
financial accountability for the BCRS with
officials of the Postal Inspection Service. Those
officials told us that the Inspection Service
conducts financial audits at selected post offices
every year to test internal control systems and
verify financial transactions. The Inspection
Service chooses post offices to audit on a random
basis, using a stratified sample that focuses most
heavily on those post offices that generate the
most revenue. One aspect of the audits is a review
of accountable paper, which includes postage
stamps, money orders, philatelic items, etc.
The Inspection Service officials stated that at
the 183 post offices for which it issued reports
between August 3, 1998, and June 18, 1999, it
found some isolated problems with accountable
paper, but none were systemic. Additionally, the
officials stated that because the BCRS has a
unique finance accounting code, any internal
control, inventory, or financial transaction
problems involving the BCRS would have been
specifically noted in the inspection reports. The
officials stated that since the BCRS went on sale
in July 1998, the Inspection Service has not
identified any problems with the BCRS.
We also reviewed 55 reports that we randomly
selected from the 183 post office financial audit
reports the Inspection Service issued between
August 3, 1998, and June 18, 1999. Our review of
those 55 reports noted that at 18 locations, some
type of stamp accountability problem was noted--
though none of the problems were described as
potentially systemic in nature. None of the 55
reports noted any problems with the BCRS. Our
assessment of the accuracy of BCRS cost data
provided by the Service was limited to a review of
the 55 reports and OIG's March 2000 report on the
BCRS program.
To help in our evaluation of the
effectiveness and appropriateness of using the
BCRS as a means of fund-raising, we requested
information from 10 foreign postal administrations
that had experience with semipostals. Those 10
postal administrations were: (1) Austria, (2)
Belgium, (3) Canada, (4) Germany, (5) the United
Kingdom, (6) The Netherlands, (7) New Zealand, (8)
Sweden, (9) France, and (10) Switzerland. In
addition to information about their experiences
with semipostals, we requested specific sales data
for calendar year 1998. If those data were
unavailable, we requested data for the most recent
year prior to 1998 for which data were available.
Eight of the postal administrations provided
information-France and Switzerland did not. The
countries were judgmentally selected after we
considered several factors. First, we wanted our
survey to include postal administrations that are
currently issuing semipostals and postal
administrations that have issued semipostals in
the past but are not currently doing so. Of the 10
foreign postal administrations selected, 7 are
currently issuing semipostals, and 3 have issued
semipostals in the past but are not currently
doing so. Second, we wanted our survey to include
some postal administrations that have long-
standing experiences with semipostals. Of the 10
selected, 6 issued their first semipostals more
than 50 years ago. Third, we wanted to include
only postal administrations in countries with
sizeable populations. We defined sizeable as
countries with populations of more than 3 million.
Using population size as one of our selection
criteria, we automatically excluded 16 of the 49
countries that issued semipostals in the 1990s
because they had populations of fewer than 3
million. The 10 countries we selected had
populations ranging from 3.8 million to 82.1
million in 1998. Fourth, we wanted to survey
foreign postal administrations that would most
likely respond to our request for information
about their experiences with semipostals. To do
this, we included foreign postal administrations
that have responded to our prior requests for
information about other program operations, as
well as foreign postal administrations for which
the Postal Service could provide us with the name
and address of the counterpart of the Postal
Service's Manager of Stamp Services. Of the 10
selected, 7 had previously participated in our
1997 survey concerning mailbox restrictions in
foreign countries.1 The Postal Service was able to
provide us with the names and addresses of
appropriate contacts in all 10 foreign postal
administrations selected.
To help ensure that our survey would provide us
with sound data on the experiences of foreign
postal administrations, we also discussed, with
the Curator of the Smithsonian Institution's
National Philatelic Collection and the President
of the American Philatelic Society, the list of
postal administrations that we planned to survey.
Both the Curator of the Smithsonian Institution's
National Philatelic Collection and the president
of the American Philatelic Society said our list
was sound and should provide us with useful
information for our study. Nevertheless, because
the postal administrations we surveyed were not
chosen at random, we cannot generalize their
experiences to all postal administrations that
have issued semipostals.
To obtain the views of key stakeholders involved
with breast cancer research/fund-raising and
philately regarding the effectiveness and
appropriateness of the BCRS as a fund-raising
tool, we judgmentally selected and interviewed
officials representing (1) the American Cancer
Society, (2) the National Breast Cancer Coalition,
(3) the Susan G. Komen Breast Cancer Foundation,
(4) the American Philatelic Society, and (5) the
Smithsonian Institution's National Philatelic
Collection. We also obtained the views of Postal
Service officials and interviewed Dr. B. I.
Bodai-the individual credited with conceiving the
idea for the BCRS and spearheading the lobbying
effort that resulted in Congress passing the Stamp
Out Breast Cancer Act. Additionally, we met with
officials from the National Institutes of Health
and the Department of Defense to review the
arrangements they had with the Postal Service to
receive the surcharge revenue from the BCRS and to
discuss their plans for utilizing the funds they
receive.
To obtain the public's opinion of the BCRS, we
contracted with International Communications
Research (ICR) of Media, PA, a national market
research firm, to include questions about the
semipostal in one of the national telephone
surveys it conducts on a regular basis. The ICR
national telephone survey that included our
questions was conducted during the period between
August 4 - 8, 1999. A total of 1,017 adults (507
males/510 females, 18 years of age or older) in
the continental United States were interviewed.
ICR's survey was made up of a random-digit-dialing
sample of households with telephones. To ensure
that survey results could be generalized to the
adult population 18 years of age or older in the
continental United States, ICR adjusted the
results from the survey to account for selection
probabilities and to match the characteristics of
all adults in the general public according to
demographic groups, such as age, gender, region,
and education. Because we surveyed a random sample
of the population, the results of the survey have
a measurable precision or sampling error. Sampling
errors are stated at a certain confidence level.
The overall results of our survey are surrounded
by 95 percent confidence levels of plus or minus 4
percentage points or less.
The practical difficulties of conducting any
survey may introduce nonsampling errors. As in any
survey, differences in the wording of questions,
in the sources of information available to
respondents, or in the types of people who do not
respond can lead to somewhat different results. We
took steps to minimize nonsampling errors. For
example, we developed our survey questions with
the aid of a survey specialist and pretested the
questions prior to submitting them to ICR.
Finally, to identify the statutory authorities
consistent or in conflict with using the Postal
Service and the BCRS to raise funds for nonpostal
purposes, we researched and analyzed applicable
sections of the U.S. Code and Postal Service
regulations. We also discussed, with postal
officials, the legislative history of the act and
the Postal Service's current position on
semipostals.
_______________________________
1 See U.S. Postal Service: Information About
Restrictions on Mailbox Access (GAO/GGD-97-85, May
30, 1997).
Appendix II
Foreign Postal Administrations' Experiences With
Semipostals
Page 47 GAO/GGD-00-80 Breast Cancer Research Stamp
As part of our review of the BCRS, we surveyed 10
foreign postal administrations to determine their
experiences with semipostals. Eight foreign postal
administrations responded to our survey: Austria,
Belgium, Canada, Germany, the United Kingdom, The
Netherlands, New Zealand, and Sweden. Two postal
administrations, France and Switzerland, did not
respond. This appendix highlights the information
provided by the foreign postal administrations
that was not included as part of our discussions
on the effectiveness and appropriateness of the
Postal Service's BCRS.
We found that semipostals have a long-standing
tradition in some countries. Semipostals first
appeared around the turn of the last century and
continue to be used, to this day, to raise money
for a number of charitable causes. We also found
more differences than similarities among
countries' semipostal programs.
The Tradition of Foreign Semipostals
According to an article in the July 13, 1998,
issue of Linn's Stamp News,1 the first semipostals
were issued in New South Wales (now part of
Australia) in 1897 to raise money for a
tuberculosis medical facility in Sydney. 2 Since
then, many other countries have experimented with
semipostals as a way to raise money for charitable
causes. According to research done by the
president of the American Philatelic Association,
approximately 50 foreign countries issued
semipostals at some time during the 1990s. Of
those, 17 issued semipostals on a routine basis.
Those countries were Argentina, Aruba, Austria,
Belgium, Denmark, Finland, France, Germany,
Greenland, Hungary, Indonesia, Luxembourg, The
Netherlands, Netherlands Antilles, New Zealand,
Switzerland, and Turkey.
Many of the foreign postal administrations
responding to our survey reported long traditions
and enthusiastic support for their semipostals.
For example, Belgium, New Zealand, and The
Netherlands reported selling semipostals before
1930. Table II.1 shows when the foreign postal
administrations responding to our survey began
selling semipostals.
Table II.1: Year in Which Foreign Postal
Administrations Began Selling Semipostals
Foreign postal Year first stamp was sold
administration
The Netherlands 1906
Belgium 1910
Austria 1914
Sweden 1928
New Zealand 1929
Germany 1949
Canada 1974
United Kingdom 1975
Source: Foreign postal administrations that
responded to GAO survey.
On the other hand, the United Kingdom, Sweden, and
Canada have found semipostals to be unpopular with
the public. The United Kingdom and Sweden have
permanently discontinued sales of semipostals, and
Canada has not issued a semipostal since 1996.
The last semipostals issued by the British Post
Office (United Kingdom) were four 1989 Christmas
semipostals. The British Post Office worked with
the Charities Aid Foundation, which distributed
the surcharge revenue to selected charities. The
British Post Office reported that the 1989
Christmas semipostals were unpopular with postal
customers and Post Office staff. It said some
postal customers felt strongly that charitable
giving was a personal and private matter. The Post
Office also said that some postal customers
believed they were being pressured into buying
semipostals for their Christmas mail because if
they did not, the recipients of the mail would
perceive them to be "mean-spirited." The British
Post Office reported that other postal customers
did not fully appreciate that none of the money
was going towards the benefit of the Post Office,
an organization they thought was already making
sufficient profits.
The British Post Office also reported that the
1989 Christmas semipostals were unpopular with
many postal clerks because they had to take time
to explain to postal customers the purpose of the
semipostals and why they carried a surcharge. It
also said some post offices reportedly ran out of
regular Christmas stamps that did not carry the
surcharge, forcing postal customers to purchase
the Christmas semipostal if they wanted a
Christmas stamp.
Sweden Post reported discontinuing semipostals in
1991 because the general public disliked that form
of charitable giving. Sweden Post reported that
using semipostals to collect money for charity is
not popular and is viewed as a very inconvenient
method of charitable giving.
Although Canada Post has not discontinued
semipostals per se, it has not issued a semipostal
since 1996, when it issued a semipostal to promote
literacy. Canada Post reported that semipostals
are not popular in Canada and sell poorly. Canada
Post officials reported that postal customers are
resistant to paying more for semipostals. Postal
customers would rather give directly to the
charity of their choice than have Canada Post
choose a charity for them. Canada Post also
reported that some postal customers disliked
semipostals because (1) tax receipts were not
provided with the semipostal purchase, and (2)
they did not have a choice regarding the recipient
of the surcharge revenue.
Differences in Foreign Semipostal Programs
Our survey of foreign postal administrations found
more differences than similarities among their
semipostal programs. We found differences among
countries in (1) the yearly number of semipostal
issues, (2) beneficiaries, (3) sales methods, (4)
the primary promoters of semipostals, and (5)
surcharge amounts.
The typical number of semipostals issued each year
varied by postal administration. Austria and New
Zealand had one semipostal issue each year between
1994 and 1998. During the same period, Germany
issued between four and six semipostals each year
and The Netherlands between two and three. Table
II.2 shows the number of semipostal issues between
1994 and 1998 reported by the eight foreign postal
administrations that responded to our survey.
Table II.2: Foreign Postal Administrations: Number
of Semipostal Issues, 1994 - 1998
Foreign 1994 1995 1996 1997 1998
postal
administrati
on
Germanya 5 4 5 6 4
Belgiuma 3 4 3 3 3
The 2 2 2 3 2
Netherlands
Austria 1 1 1 1 1
New Zealand 1 1 1 1 1
Canada 0 0 1 0 0
United 0 0 0 0 0
Kingdom
Sweden 0 0 0 0 0
aGermany and Belgium's semipostal issues typically
encompass several designs. For example, in 1998,
Germany issued 4 semipostals that encompassed 17
different designs.
Source: Foreign postal administrations that
responded to GAO survey.
The beneficiaries of the surcharge revenue raised
by foreign semipostals also varied, as might be
expected. For example, Germany's 1998 semipostals
raised funds for welfare programs, youth programs,
and sports. On the other hand, Austria's 1998
semipostal raised money for the promotion of stamp
exhibitions and philatelic activity. Table II.3
shows the beneficiaries of the 1998 semipostal
surcharge revenue for the eight foreign postal
administrations.
Table II.3: Foreign Postal Administrations:
Beneficiaries of 1998 Semipostal Surcharge Revenue
(Unless Otherwise Noted)
Foreign postal administration Beneficiary of surcharge
revenue
Austria Philately
Belgium Philately, sports,
solidarity (1996)
Canada ABC Canada Literacy
Organization (1996)
Germany Sports, youth programs,
welfare programs
United Kingdom Charity, philately (in
previous years)
The Netherlands Youth and elderly programs
New Zealand Children's health
Sweden Philately (in previous
years)
Source: Foreign postal administrations that
responded to GAO survey.
The foreign postal administrations also varied in
the ways they sold their semipostals. For example,
in The Netherlands, school children sell a
semipostal to benefit children's causes door-to-
door. This method has a 75-year tradition and,
according to officials, is very effective. On the
other hand, The Netherlands' semipostals for the
elderly are not sold door-to-door, are purchased
mostly by collectors, and do not sell nearly as
well. Semipostals in The Netherlands typically
remain on sale for 1 year.
In Austria, semipostals typically remain on sale
for 5 years; and in Germany, semipostals are
typically sold for only about 3-� months. In New
Zealand and Belgium, semipostals are typically
sold in post offices for 1-� months and 6 months,
respectively, and by mail order for 1 year.3
The Austria, Belgium, and The Netherlands postal
administrations reported that the primary
promoters of their semipostals were the
semipostals' beneficiaries. Germany and Sweden
reported that the postal administration was the
primary promoter, and Canada reported that the
primary promoters of its 1996 semipostal were the
Canadian Government and the beneficiary of the
surcharge revenue. New Zealand reported that the
postal administration and the beneficiary of the
surcharge revenue promoted their semipostals
equally.
The eight foreign postal administrations
responding to our survey reported differing
surcharges for their semipostals, ranging from 2.7
percent to 50 percent over postage value. The
United Kingdom, for example, reported adding a 2.7-
percent surcharge to its 1989 Christmas
semipostal. The Netherlands, on the other hand,
included a 50-percent surcharge in its semipostals
for the children and the elderly. Table II.4
displays the surcharges that the eight foreign
postal administrations included in their
semipostals.
Table II.4: Surcharge Amounts Included by Foreign
Postal Administrations (1998 Unless Otherwise
Noted)
Foreign postal administration Surcharge percentage
included
The Netherlands 50%
Austria 40%
Germany 33% - 50%
Belgium (1996) 17.6% - 25%
United Kingdom (1989) 2.7% - 6.6%
Canada (1996) 11.1%
New Zealand 6.25% - 12.5%
Sweden Information not provided.
Source: Foreign postal administrations that
responded to GAO survey.
Similarities in Foreign Semipostal Programs
There were some similarities among a majority of
the semipostal programs of the eight foreign
postal administrations responding to our survey.
The similarities were that (1) most foreign postal
administrations promoted their semipostals no more
heavily than other postage stamps, and (2) more
organizations wanted to be the beneficiaries of a
semipostal's surcharge revenue than could be
accommodated.
The postal administrations of Austria, The
Netherlands, Sweden, and Canada reported promoting
their semipostals at about the same level that
they promoted their other stamps, although Sweden
and Canada have not issued semipostals since 1991
and 1996, respectively. Germany reported promoting
its semipostals less extensively than its other
stamps. Belgium and New Zealand were the only
postal administrations that reported promoting
their semipostals more extensively than other
stamps.
The most similar experience reported by the
foreign postal administrations was that more
organizations wanted to be the beneficiaries of a
semipostal's surcharge revenue than the postal
administration could accommodate. Of the seven
postal administrations commenting about semipostal
beneficiaries, only Sweden reported that it did
not have more organizations that wanted to be the
beneficiaries of a semipostal than it could
accommodate (the British Post Office did not
comment). Some of the postal administrations
explained how they handled this situation. The
Austrian postal administration reported that the
legislature made decisions regarding which
organizations were to have a semipostal to raise
money. The Belgian postal administration reported
that it had developed strict criteria that were
applied in order to determine which organizations
received a semipostal. Canada Post reported that
its Stamp Advisory Committee decides which
organizations are to receive semipostals in years
when semipostals are offered. The Netherlands
postal administration reported that its
semipostals follow tradition. Each year, one
children's semipostal and a semipostal for the
elderly are issued. Additionally, every 5 years,
The Netherlands postal administration issues a
semipostal to benefit The Red Cross.
_______________________________
1 According to the Postal Service, Linn's Stamp
News is one of the Nation's primary sources of
philatelic news.
2 Michael Baadke, "New to the U.S., but More Than
a Century Old," Linn's Stamp News (July 13, 1998).
3 On March 30, 2000, the Belgium postal
administration informed us that in the future
semipostals will be sold in all post offices
during the month of issue and for 1 additional
month. Additionally, the postal administration
stated that semipostals will be sold for 6 monthis
in post offices having philatelic counters and for
1 year by mail order.
Appendix III
Comments From the U.S. Postal Service
Page 49 GAO/GGD-00-80 Breast Cancer Research Stamp
Appendix IV
GAO Contact and Staff Acknowledgments
Page 50 GAO/GGD-00-80 Breast Cancer Research Stamp
GAO Contact
Bernard L. Ungar (202) 512-8387
Acknowledgments
Gerald P. Barnes, Charles F. Wicker, Roger L.
Lively, Alan N. Belkin, Jill P. Sayre, William R.
Chatlos, and Stuart M. Kaufman made key
contributions to this report.
*** End of Document ***