Charities Might Get Reprieve on Postal Increases Under Legislation Pending in Congress

The U.S. House of Representatives last week passed a sweeping measure to overhaul the postal system — and charities that rely on direct mail to raise money and educate people about their causes could save money on postage if the bill becomes law.

The measure, which has been debated for more than a decade, would streamline operations at the U.S. Postal Service, cut costs, and free up billions of dollars. If it becomes law, postal officials have said they would not need to increase postage in 2006 by an average of 5.4 percent, as they now plan.

What’s more, the bill would ensure that postage increases do not exceed the rate of inflation. It would scrap the current system for setting rates, which relies on an independent body to spend months deliberating over research and comments submitted by nonprofit groups and other big mailers.

A similar bill is now under consideration by the Senate.

If the legislation is enacted, charities could escape the postage increases they have been expecting next year. At Easter Seals, which sends more than 50 million fund-raising mailings annually, not having to pay a postal increase would save the charity $378,000.

But lobbyists for nonprofit mailers cautioned charities that although the House bill was a major step, the legislation has several more hurdles to clear.

The Bush administration opposes key parts of both the House-passed bill and the one pending in the Senate. It is also possible the final legislation will not free up as much money as the House bill would, so some rate increases might still be needed.The Senate bill is expected to reach the floor in September. Any differences in the two measures would have to be resolved and then the final bill must be approved by President Bush.

The House plan offers two provisions that would save money for the Postal Service — and help offset the need for large postage increases.

It would free up more than $70-billion in the Postal Service’s employee pension fund — money that Congress has required the service to put in escrow, but the service says it does need to fulfill its pension commitments.

In addition, it would require the Treasury Department to pay $27-billion in retirement benefits to postal workers who served in the military. In the 1970’s, the Postal Service was told it needed to take on that obligation from the Treasury Department.