Departments that mail at non-profit rates should brace for hefty rate increases over the next year, says Mail Services Director Bill McCart.
Between October 1997 and October 1998 are occurring three separate rate increases that together will boost non-profit rates by as much as 25 percent. Two of the increases (October 1997 and October 1998) are modest, 3 to 4 percent increases that are the last of six annual increases mandated by the Revenue Foregone Act of 1992. The third and largest increase for non-profit mailers, about 18 percent, is part of the U.S. Postal Service's omnibus rate proposal scheduled for implementation in May 1998. By contract, first class rates and bulk rates for commercial mailers are proposed to increase by just 3 percent.
At one time, Congress provided subsidies to the Postal Service for non-profit mail, but this was discontinued in the mid-1980s. Since then, non-profit rates have been underwritten by the rates paid by commercial mailers.
Citing unfair competition and abusive practices, commercial mailers have lobbied Congress successfully for greater restrictions on non-profits' mailing practices, and for rates that shift more costs from commercial to non-profit mailers.
Industry insiders expect the trend to continue, and some project that non-profit rates will be eliminated altogether within the next several years.
Departments should plan their budgets and mailings carefully to minimize the impact of the rate increase.