News: Nonprofits Could Get Break On Postage Hike

May 29, 2007       Mark Hrywna      

Nonprofits that mail flats could get a break from a recent postal increase as a result of a $0.02 reduction in the Standard Regular nonprofit rate recommended by the Postal Regulatory commission on Friday. The recommendation still needs the approval of the United States Postal Service (USPS) Board of Governors, which meets in June.

The Direct Marketing Association (DMA) was pursuing an even greater reduction and was disappointed with the PRC’s decision, said Jerry Cerasale, senior vice president for government affairs. “Any reduction is some relief, but if it goes temporary like this — in the middle of the heavy mailing season — it would be tough,” he said.

With nonprofit flats rates rising between 20 and 40 percent as of May 14, depending on worksharing and other factors, a 2-cent cut is a substantial reduction, said Tony Conway, executive director of the Alliance of Nonprofit Mailers. “For any nonprofit that mails flats at any quantity at all, it’s a healthy little break,” he said.

The Board of Governors also could decide whether to make the reduction permanent. Since the Postal Service would be able to change rates under the new laws by this time next year, it makes sense to make the reduction permanent, Cerasale said.

Cerasale doesn’t expect any movement until the end of next month or early July given the public notice requirements, even if the Governors give their approval as soon as possible. “Our hope is they would be ready to vote on it” by their meeting in June, he said.

“We are encouraged that the PRC at least seemed to recognize our fundamental premise that flat rates can be reduced without imposing higher costs on other classes of mail,” said Cerasale. “We have every confidence that proposed relief can be made permanent without causing financial harm to the Postal Service.”

“We believe this option responds to the concerns expressed by the governors and all of the many participants who submitted comments,” said PRC Chairman Dan Blair. “It leaves Standard letter rates untouched, protects the Postal Service’s financial standing, allows USPS project revenues to meet expected costs, and does not reduce the Contingency Fund.”

If the reduction were to go into effect July 1, Conway estimated it would mean a revenue loss to the Postal Service of about $84 million, “but it helps keep those flats mailers in the ball game,” and tempered the rate shock.