Nonprofits Still Hit Hard in PRC Rate Increase

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Nonprofit agencies received a little good news in with a lot of bad news last week when the Postal Rate Commission issued its recommendations on the rate case.

The good news: The average recommended increase for Standard-A nonprofit mail is 9.6 percent, compared with the 11.3 percent increase proposed by the U.S. Postal Service last summer. The bad news: It's still nearly a 10 percent increase.

Some of the PRC's recommendations were higher than those the USPS proposed. The PRC recommended that the basic rate for Standard-A nonprofit mail, such as fundraising pieces, newsletters or fliers, before any automation, be raised from 13.8 cents per piece to 16.9 cents. The USPS had proposed 16.5 cents.

Nonprofit organizations, large and small, said that the increases are unfair and that that they could put some in the position of having to weigh the cost of providing a service vs. the cost of getting their messages out.

"We're disappointed because we work so hard at trying to contain our costs," said Aggie Alexander, senior vice president at St. Jude Children's Research Hospital, Memphis, TN. "Then these increases are thrown at us. We just have to continue to mail as smart as we can and find a way to absorb the cost."

"Ouch," said Susan Sanow, director of membership and communications at the Washington Council of Agencies, a nonprofit organization that represents 610 charitable nonprofit agencies. "For a country that says they stand behind the charitable cause, this decision does not support what they say."

The council sends 25 to 30 mailings a year to its members and the nonprofit community.

According to Neal Denton, executive director of the Alliance for Nonprofit Mailers, the majority of nonprofit mail is Standard A, but those who will be hit hardest will be publishers of nonprofit publications. They are looking at an increase from 22.6 cents per piece to a recommended 26.2 cents for small publications (4 oz., 20 percent advertising, zone 5, basic). National publications (14 oz., 60 percent advertising, zone 5, carrier route presort) would increase from 29.1 cents to 31.6 cents. The USPS had proposed 25.4 cents and 30.8 cents respectively.

"They weren't expecting to see any real increases at all," Denton said. "This increase is going to cause these publishers to rethink their strategy for disseminating their publications. They will likely have to raise the price of subscriptions."

"The rates we are looking at are higher than those that were recommended for the for-profit organizations," said Louis Milan, senior director of strategic marketing and business affairs at Consumer Reports, Yonkers, NY, which has a circulation of 4.5 million. "This is going to make it a lot harder to do business. Our postal bill is already over $25 million a year."

Many nonprofits think the recommended increases stem from the PRC's use of 1996 figures instead of 1997 figures, which were not yet available. The 1996 figures were rather high because of both commercial reclassification in July and nonprofit reclassification in October of that year. The PRC had asked the USPS Board of Governors to delay the case until 1997 figures could be gathered.

"We asked the board to undertake a procedure that would have allowed us to wait for last year's figures, but they didn't want to do that," said Steve Sharfman, general counsel for the PRC.

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