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NOTE 4--ALLOCATION OF JOINT COSTS OF MAILINGS:
Expenses related to both * * * [prospect mailings and
housefile mailings] are allocated to public education
and fundraising based on the relative content and
intent of all mailings. The content of each and every
mailing is evaluated to determine what percentage of
the mailing satisfies the goal of educating the public
and what percentage of the mailing deals with
fundraising. Public education includes any information
about cancer, its treatment and cures as well as
discussion of the Council’s [petitioner’s] programs in
research and cancer patient services. Fundraising
includes direct requests for money as well as emotional
appeals intended to solicit funds. The relative
content of individual * * * [prospect mailings and
housefile mailings] are summarized and a composite
percentage is determined which is then applied to total
costs. Since the goals of the direct mail campaign are
to educate the public and to raise funds, none of the
costs directly associated with the mailings are
allocated to management and general [expenses?].
Petitioner’s 1988 financial statement, published as part of
petitioner’s Annual Report for 1988, contain the following
explanation of petitioner’s allocations of its 1987 and 1988
mailing campaign “joint expenses” between public education and
fundraising:
NOTE 5--ALLOCATION OF JOINT COSTS OF MAILINGS:
In 1988, the Council [petitioner] incurred joint costs
of $3,156,765 for informational materials and
activities that included fundraising appeals. These
joint costs are expenses related to both * * *
[prospect mailings and housefile mailings] and have
been allocated as follows: $1,463,432 to public
education and $1,693,333 to fundraising. In allocating
the joint costs between public education and
fundraising, the Counsel evaluates the content or
message of the mailing and the intended audience. If
the content is information about cancer, its
treatments, cures and prevention and requests for the
reader to take some action other than sending a
contribution, then the public education function has
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