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I recommend having a combination of the two--
Mailed newsletters, invites, etc. are fun to receive among all of the bills and junk mail. Do send out hard copy newsletters if you can afford it-- even if it's just a very short letter telling of what's going on.
Also set up a mailing list for alumni who are in the area or would like to get the "we're having an impromptu BBQ this weekend... come on down!" messages that you might not have time to set up a full mailing for. Email mailing is wonderful for the quick messages, and giving your alumni the option to also be on an email list can help them "get the news first."
~ Mel.
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