- 41 -
gave instructions as to the mailing list numbers, the copy, the
dates of mailing, and the total number of letters to be sent.
Petitioner received from W&H a monthly status report of the
cumulative costs and revenues of each direct mail package mailing
and a proposed schedule of future mailings. Petitioner was also
advised with regard to test mailings, typically of 5,000 letters,
that W&H had done of proposed mailing packages. If a test
mailing was successful, then W&H generally recommended that more
mailings of that package be “rolled out” in greater quantities.
W&H issued purchase orders on behalf of petitioner with
respect to all of the goods, services, and other expenditures
required for the various mailings. This was done on an on-going
basis and involved such items as computer work, mailing house
expenses, mailing list rentals, and printing. When petitioner
approved the making of a mailing, W&H and petitioner considered
petitioner to have authorized W&H to order and arrange for all of
the related goods, services, and other expenditures required to
effectuate the mailing.
Petitioner accrued the amounts shown in table 7 as its
expenses for (1) postage and shipping, (2) printing and
publishing, (3) fundraising fees,10 and (4) mailing list rentals.
10 Compare the accruals shown on the fundraising fees
column in table 7, with the payments shown supra table 3. When
adjusted for the W&H reimbursements pursuant to the Contract, the
net accrual amounts are fairly close to the actual payment
amounts, except for 1986, where the difference is about $275,000.
(continued...)
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