February 7, 2018

Saves Nonprofit Mailers $61.5 Million per Year

Today, the Postal Regulatory Commission issued an extremely important order, agreeing with the Alliance of Nonprofit Mailers and over 80 nonprofits that wrote letters. The USPS will not be allowed to change the calculation of the 60 percent ratio between nonprofit and commercial Marketing Mail rates.

The Alliance led the opposition to this, filing two sets of extensive comments, mainly because it would have caused major rate shock to nonprofit mailers. Nonprofit Regular mail would have gone up 4.2 percent with the USPS-proposed change.

The PRC Order says, “The Postal Service states ‘[t]he updated Docket No. R2018-1 revenue-neutral price changes that would be necessary to move the nonprofit-to-commercial average revenue per piece ratio to 60 percent at the subclass level are +0.74 percent for Nonprofit ECR, -0.03 percent for Commercial ECR, +4.20 percent for Nonprofit Regular, and -0.61 percent for Commercial Regular.'”

Based upon FY 2017 nonprofit Marketing Mail postage figures, this translates into $61.5 million per year in postage savings for nonprofits.

The PRC cited not only the comments of the Alliance, but also the over 80 grass-roots letters that were sent to the Commission by individual nonprofits to verify the “rate shock” that this proposal would have caused. We are extremely thankful for these letters. The nonprofits’ comments synced up very well with the Alliance arguments, as described by the Commission:

“A common theme among nonprofit mailers seeking rejection of the Petition is that application of the 60 percent rule at the subclass level would negatively impact the missions of nonprofit mailers dependent on the current system of calculation.  Alliance of Nonprofit Mailers (ANM) contends that the current methodology protects nonprofit mailers from unpredictable rate fluctuations and manipulations to rate design and mail preparation requirements. It claims that the relationships between nonprofit and commercial rates have remained stable since 2008 and the Postal Service has not articulated sufficient rationale to depart from the current methodology.”

Indeed, the Commission agreed with the Alliance that the USPS did not sufficiently justify its proposal:

“Pursuant to 39 U.S.C. § 3652(e)(2), improvements in the “quality, accuracy, or completeness of Postal Service data required by the Commission” may be initiated or entertained by the Commission if “the attribution of costs or revenues to products has become significantly inaccurate or can be significantly improved” or if “such revisions are, in the judgment of the Commission, otherwise necessitated by the public interest.”

The Commission finds that none of the three provisions are met. The Postal Service has not shown that the current methodology is significantly inaccurate and a change in methodology is necessary. Likewise, the Postal Service has not shown that the proposed reversion to the subclass calculation of the 60 percent ratio would result in a significant improvement in the Postal Service’s accounting methodology. Finally, the change is not necessitated by public interest and, in fact, the public interest militates against adoption of the proposal because of the potential of rate shock to nonprofit mailers.”

The petition to make this proposed change was made by the USPS all the way back on July 31, 2017. Now it is over.