July 7, 2016

When the House Oversight and Government Reform Committee asked for comments on its discussion draft of a new postal reform bill, the Alliance teamed up with several leading associations in the nonprofit mailing community to ensure its voice would be heard. These groups made sure their members knew about the draft bill and encouraged them to comment. They included the Direct Marketing Association Nonprofit Federation, the Direct Marketing Association of Washington, the Association of Direct Response Fundraising Counsel, and the National Catholic Development Conference.

One of our biggest concerns with the draft bill is that the external discipline of the Consumer Price Index (CPI) cap on postage increases not be replaced with either legislated increases above the CPI or internal measures of postal costs that are subject to some control by the regulated monopoly.

Many nonprofits use the U.S. Postal Service as one of several suppliers in their fundraising, communications, and membership benefits programs. USPS is the only supplier that they cannot put out for competitive bid. There is no competitor for the delivery of hard copy for fundraising, payments, magazines, newsletters, offering envelops, thank you letters, invitations, and other communications. There are digital alternatives but they are not direct replacements, not as scalable, not as effective, and not preferred by donors, subscribers, and members.

The only real protection for captive nonprofit customers of USPS is an external index over which the USPS has no control. External price indexes are the standard of practice in the regulation of government monopolies now. Internal costs are not.

Most nonprofits cannot raise their membership rates, subscriptions, or expected donations at the CPI rate. And most of their suppliers, through the forces of direct competition, have not been able to raise their pricing as much as the CPI.

USPS has been incentivized to take out $15 billion of annual costs since the CPI cap was started. It should continue this admirable and necessary progress that is similar to what private sector organizations, both for-profit and nonprofit must live with in today’s world.