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By industry custom, if a rented name responds favorably to
the mailing made by the lessee of the mailing list (i.e., by
sending a contribution, making a purchase, or entering a
sweepstakes contest), then the lessee is entitled to add that
name to its own housefile. The lessee thereafter may use the
name as its own and will not have to pay a further rental fee.
W&H had Wiland Associates (described infra as a services
vendor) provide management information reports to petitioner.
Among these reports was one that evaluated individual
contributors on mailing lists, based on an analysis of the
following three factors: (1) recency (i.e., how recently the
last donation by that contributor was made), (2) frequency (i.e.,
how frequently that contributor has made donations to the
organization), and (3) size of the gift. All other things being
equal, a contributor who made a donation within the past 6 months
is considered more valuable than a contributor who last made a
donation 3 years ago. Similarly, all other things being equal, a
contributor who made 10 donations is considered more valuable
than a contributor who made just one donation. Lastly, all other
things being equal, a contributor who made a $100 gift is
considered more valuable than a contributor who made a $5 gift.
In the 1960's and the 1970's, the use of computers
revolutionized the operation of the direct mail fundraising
industry. Using the electronic data processing capability of
computers, mailing lists could be analyzed, compiled, and
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