Proposed Postage Increase Is Smaller Than Expected

The U.S. Postal Service has proposed increases in rates that would cause charities’ postage costs to rise by an average of 5.4 percent in 2006.

The amount of the proposed increase — which

affects all mailers — is easier for some charities to swallow than the double-digit percentage increases they expected the Postal Service to recommend. And it is less than the 6.5-percent to 7-percent average rise that charities absorbed in June 2002, the last time rates were raised.

At the Nature Conservancy, in Arlington, Va., Megan Stanley, director of membership fund raising, said, “We were budgeting upwards of 16 percent, and we are thrilled” with proposed postage increases that equal only about a third of that.

But not all charities are pleased. Nonprofit groups send out some 16.3 billion pieces of nonprofit mail annually, so postage increases can make a big difference to groups that send a lot of mail.

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Opponents of the increase say that the proposed rates are not tied to the costs of processing and delivering the mail, even though that is the approach required by Postal Service policy. Instead, they say, the increases are due to shortfalls that the Postal Service has incurred because Congress told it to set aside overpayments of $3.1-billion annually to an employee pension fund. That money, which could otherwise be used to offset costs, is now held in an escrow account.

“We’re relieved it isn’t a double-digit increase, but we’re not happy; it will still cost us more than $1.5-million more in postage,” said Meta Brophy, director of publishing operations at Consumers Union, the tax-exempt organization that produces Consumer Reports magazine for four million subscribers and millions of other mail pieces, including newsletters and books.

Lawmakers are considering ways to free up the pension-fund overpayments the Postal Service has been making and change the rate-setting process to ensure that postage increases do not exceed the rate of inflation.

Without such changes, postal experts have said, the Postal Service is likely to call for another postage increase next year to take effect in 2007. “The other half of that double-digit increase we were expecting may just be delayed until then,” said Ms. Brophy, who also sits on the board of the Alliance of Nonprofit Mailers, a coalition of more than 400 groups.

Before the new rates can be adopted, the Postal Rate Commission must vote by early February on whether to recommend them, and the Postal Service’s Board of Governors must then approve the increases and set the date when they take effect.

Proposed Rates for Bulk Nonprofit Mail in 2006