Nonprofit Postage Rates

Special, preferred postage rates for nonprofits have existed since being authorized by Congress in 1951. To qualify for Nonprofit Standard Mail rates, an organization must be a nonprofit organization organized and operated for a qualifying primary purpose (religious, educational, scientific, charitable, agricultural, labor, veterans, fraternal; certain political committees may also qualify). Under current law, the nonprofit discount rate is 40 percent.

Postal Service Files Third Version of New Proposed Rates
On April 16th, the Postal Service filed a third version of its new proposed  rates and set May 31 as the implementation date, assuming approval by the Postal Regulatory Commission. These rates remain largely unchanged from the previous two versions, although the Postal Service says it did respond somewhat to the concerns raised by the nonprofit community about huge price increases for light-weight, low, or no advertising publications. Under these new rules, many nonprofit publications will be hit with increases in postage several times higher than inflation. The primary culprit is increases in the fees charged per shipping container for Periodicals--as high as 161.8 percent for Bundles and 95.5 percent for Pallets—which are meant to be offset by reductions in the fees charged based on the weight of individual publications. Unfortunately, while nonprofit periodicals must share in the increased container charges which are divided among all the publications they contain, these lightweight publications do not benefit much from the reductions in weight charges. Nonprofit mailers of Periodicals will have to ask their mail service providers to recalculate their prices to see any benefit from this “relief” offered by the Postal Service

Postal Regulatory Commission Rejects Rate Increase Proposal
On March 6, citing non-compliance with certain statutory and regulatory requirements, namely that unequal commercial and nonprofit discounts on Standard Mail rates were not justified, the Postal Regulatory Commission rejected a rate increase proposal issued by the Postal Service earlier this year that had angered many nonprofits that publish printed magazines. The commission sent the proposal back to the Postal Service and ordered changes by March 12 so that the original April 26 implementation date can be retained. The USPS might, however, request additional time and delay the implementation date.

Impact of Postal Rate Increase for Nonprofits Higher Than First Realized
Because of the complexity of calculating postage rates for periodicals, which depend on factors such as weight, and ratio of editorial content to advertising, many nonprofits who publish magazines were slow to realize the impact that January’s proposal for a 1.966% average rate increase would have on them.  The rate increase represents a cap applicable to the entire category of periodicals mailed by nonprofits, and is supposed to equal the average rate increase across all subcategories.  In this case, however, after rates for several subcategories were specifically calculated under the proposal, nonprofits learned that their rates would increase substantially more than the announced 1.966% percent.  For example, Consumer Reports calculated it would see an 8.5% rate increase, with Guideposts estimating a rise of 9.23%.  They and many similar organizations, along with the Alliance of Nonprofit Mailers, raised their concerns with postal officials on March 4, ahead of the expected April 26 implementation of the new rate.

Postal Service Files 1.966% CPI-capped Rate Increase for April 26, 2015 Implementation
The Postal Service filed its latest Consumer Price Index (CPI) rate increase of 1.966% for nonprofit periodicals just before the close of business on Thursday, January 15, using the CPI figure released in November as their basis.  The filing is based on a 2006 law that ties postage increases to the rate of inflation.

Congressional votes on Postal Reform bills
On February 6, 2014, by a vote of 11 to 5, the Senate Homeland Security Committee passed  the Postal Reform Act (S. 1486,) which maintains the nonprofit postage discount rate. On July 24, 2013, by a straight party-line vote of 22 to 17, the House Oversight and Government Reform Committee approved their own postal reform bill (H.R. 2748.)  The bill also maintains the nonprofit discount postage rate.

House of Representatives Bill in the 113th Congress
House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) introduced the Postal Reform Act of 2013 (H.R. 2748) on July 19, 2013. A committee summary notes that the measure preserves nonprofits' ability to fundraise and communicate in an economical manner. The bill focuses on maintaining services for rural areas and proposes eliminating ordinary delivery on Saturdays. Significantly, the measure leaves in place the current 40 percent discount rate utilized by the nonprofit and charitable community.  This is the result of an aggressive advocacy effort by Independent Sector and others within the nonprofit community to educate the committee on the enormous impact of discount rate modifications, and how such changes hinder the sector’s ability to communities with its constituencies.

Senate Bill in the 113th Congress
On August 1, 2013, Sens. Tom Carper (D-DE) and Tom Coburn (R-OK), the chairman and ranking member of the Homeland Security Committee, introduced S.1486, the Postal Reform Act of 2013. In introducing the bill, Senators Carper and Coburn noted that it "seeks to address the Postal Service’s financial challenges by helping it streamline operations and giving it new tools it can use to introduce innovative new products and generate additional revenue." While the legislation, like its House counterpart, maintains the nonprofit postage discount rate, it also makes permanent the two-year, above-inflation “exigent rate increase” approved by the Postal Rate Commission which took effect on January 26, 2014.  This increase raises all postal rates by an average of 4.3%.The Committee held two hearings and two mark-up sessions on the bill.

Independent Sector and its members have been actively engaged with legislation co-sponsors and key committee staff to share with them the importance of maintaining the current nonprofit postage discount rate. Due to these efforts, postal reform legislation in both the House and Senate preserves the nonprofit discount rate.

Among other advocacy efforts, Independent Sector and its members sent a letter to Chairman Darrell Issa (R-CA) expressing support for preserving the nonprofit postage discount rate in legislation introduced in the 113th Congress. Click here to read the letter and see who signed.

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