February 14, 2008

Nonprofit Postage Rates Jump As Much As 7.6 Percent

By Mark Hrywna
Stop me if you've heard this one before: Postal rates are going up this spring.

In the first increase under the new pricing system, the standard mail category used widely by nonprofits will see an average increase of 2.875 percent, coming in under the 2.9-percent cap.

And, nonprofit standard regular parcels and Non-Flat Machinable, which effectively was a new class that doubled rates for some mailers in some cases, will increase about 7.6 percent.

The federal legislation that Congress approved in December 2006 allows the United States Postal Service (USPS) to adjust rates each May no more than the Consumer Price Index for All Urban Consumers (CPI-U) for the preceding 12 months and provide 90 days' notice. In this case, the CPI-U was 2.9 percent and the new rates will take effect May 12.

"Nonprofits generally made out well in this case," compared to commercial mailers, said Anthony (Tony) Conway, executive director of the Alliance of Nonprofit Mailers in Washington, D.C. "No increase is a good increase but, relatively speaking, they're pretty good."

Nonprofit periodicals, and periodicals generally, effectively saw an across-the-board hike, with little variance in the nonprofit category, Conway said. "You really didn't have significant winners and losers in that category," he added, which as a class had the smallest increase of any others, at 2.71 percent. Other classes ranged between 2.7 and 2.9 percent, he said.

Nonprofit flats on the whole made out well, Conway said, with the standard nonprofit regular and enhanced carrier route to increase 0.7 percent while standard nonprofit regular letters will rise 0.8 percent.

After nonprofit standard regular flats "really took it in the ear" last year, Conway said the category will actually see a 1.2-percent decrease in rates, "which is awfully good news.

"Hopefully those that have sought to leave nonprofit flats because the increase was so large they couldn't afford it, this will induce them to go back," he said.

But it's not good news for all nonprofit categories. Nonprofit standard regular parcels and Non-Flat Machinable (NFM), which effectively was a new class that doubled rates for some mailers in some cases, will rise about 7.6 percent.

When it comes to nonprofit standard regular parcels and Non-Flat Machinable, "This kind of mail tends to require a lot of manual handling because it does not process well on the Postal Service's automated equipment," Conway said. "As a result, any time you have more postal labor involved in processing, i.e., sorting your mail, the more expensive the price is going to be. The more the mail can be drop-shipped or run on automated equipment," he said, the more the decrease in the amount of postal labor and price.

Standard nonprofit ECR rate will increase by 2.2 percent, Conway said, and other standard nonprofit mail was substantially below the 2.9 percent average of the class.

In spite of the increases, Conway prefers this new pricing method brought in under the Postal Accountability and Enhancement Act.

"It's a far, far better system than the past system of huge increases," he said, with incremental, more predictable increases so mailers can plan for them. "Mailers for years were complaining that they want a system more like a regular business."

Conway also noted that the Postal Service reported sizable volume decrease in the first quarter of its fiscal year, missing overall income projections by $500 million. All classes of mail decreased in volume except periodicals lost volume, he added. "That's owing to two things: Partially the rate increase that went into effect last year, and more than that, owing to the fact that the economy is off."

The Postal Service traditionally is "a real canary in the mineshaft for the economy as a whole," Conway said. With businesses looking to cut back, mailings tend to be among the first areas cut. Two sectors of the economy in particular that were off, and are sizable mailers, were financial institutions and the housing market. "Both segments tend to pump a lot of mail into the system."

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This article is from NPT Instant Fundraising, a publication of The NonProfit Times.

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