House Passes Nonprofit Rate Relief Bill

In a victory for nonprofit mailers nationwide, the House of Representatives yesterday passed S. 2686, a bill that grants nonprofit mailers postal relief and counteracts increases proposed in the U.S. Postal Service's rate case.

At press time, the bill had been sent to President Clinton, who is likely to sign it. The bill passed the Senate earlier.

The bill was introduced by Sens. Thad Cochran, R-MS; Daniel K. Akaka and Daniel Inouye, both D-HI; Richard Durbin, D-IL; and Joseph Lieberman, D-CT. Cochran is chairman and Akaka is ranking minority member of the Senate Subcommittee on International Security, Proliferation and Federal Services.

Under the legislation, the cost of processing Nonprofit Standard-A and Periodicals mail would no longer be measured separately. Instead, separate procedures would be used to develop rates for these classes of mail. According to insiders, the USPS' inability to accurately measure nonprofit costs is what created the need for the legislation.

The bill stipulates that nonprofit rates would always be a percentage of commercial rates — the two categories would always be compiled and counted together — which nonprofits think would greatly improve the reliability of USPS data and may eventually lower their rates.

The bill sets nonprofit periodical rates and other preferred rates at 95 percent of the counterpart commercial rate. As a result, nonprofit mailers would receive a 5 percent discount on the commercial rate, excluding the advertising portion.

In addition, it sets the revenue per piece for Nonprofit Standard-A mail to reflect a 40 percent discount on the revenue per piece for commercial Standard-A mail. The USPS would determine Nonprofit Standard-A mail rates after computing the average revenue per piece for all Standard-A mail, then discounting the nonprofit portion by 40 percent.

Because commercial Standard-A mail is more expensive to process — because of a higher percentage of flats and other odd-sized and heavy pieces — the actual rates paid by nonprofits would range from 63 percent to 67 percent of the equivalent commercial rates. Those percentages could vary slightly in future rate cases. Nonprofit periodical rates would be the same as the rates for commercial periodicals, minus a 5 percent discount for the editorial portion of the postage. The same rates would apply to classroom periodicals.

The victory is especially sweet for mailers, because the bill can now be given to the Postal Rate Commission in time to be incorporated into the current rate case. If the legislation had not passed both houses of Congress and was not signed into law before Congress adjourned this session, nonprofit rates would be set by the PRC under current law. If that happens, nonprofit rates could increase by double digits, with some rates increasing as much as 48 percent.

Congress, which was supposed to adjourn Oct. 6, has extended the session each week since then.

Neal Denton, executive director, Alliance of Nonprofit Mailers, Washington, said S. 2686 “locks in the rate relationship between nonprofit and commercial rate mail, which also protects nonprofits from current and future rate shock.”

In addition, he said, the measure would save the nonprofit community $1.035 billion annually.

One member of the Direct Marketing Association Nonprofit Federation said his organization's postage costs would increase by $270,000 per year without the new legislation.

Kerry Knight, director of distribution and postal affairs at the National Geographic Society, Washington, is pleased with the passage of the bill.

“If the bill had not passed, we would have been looking at rate increases of between 16 [percent] and 18 percent,” Knight said. “Since the bill is passed, we will have increases of about 11 [percent] to 12 percent.”

As for its Standard-A mailings, Knight said the bill's passage “will save us 3 [percent] or 4 percent off of the increases that we are going to have to pay.”

Knight also said he is happy about the standardization of the process that the bill allows.

“Going forward now, we don't have to worry about having different information than the commercial side,” he said, “which was confusing and took the post office a long time to figure out.”

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