Fix Nonprofit Postal Rates - Now
WASHINGTON does not do a great deal to help nonprofit groups, but it has for years helped offset their mailing costs. Now, for the first time, it appears Congress will cut those funds. If so, Congress must, as a civic responsibility, help put nonprofit mailers on a more secure footing.
Nonprofits now pay the full cost the Post Office incurs for their second- and third-class mail. But federal funds offset the "overhead" the Post Office charges to mail journals, periodicals, and the various fund-raising and informational letters that churches, hospitals, veterans', arts, and volunteer groups send out. Those mailings help keep America's civic infrastructure alive.
This nonprofit postal overhead is made up each year through "revenue forgone" monies voted on by Congress. Last year's total was $460 million. This year it is $480 million. In flusher times, revenue forgone was a foregone conclusion. Not any more. A budgetary drama over how much to support nonprofits has been building, with the Reagan and Bush administrations arguing with Congress to slash it severely.
Under the current system, nonprofit business offices fasten their seat belts each year for another Mr. Toad's Wild Ride through the House and Senate appropriations process. They navigate past members' pet projects, commercial-mailer envy, and White House rhetoric. As the federal budget gets tighter, the ride gets wilder. It also gets more expensive. Two years ago overall postal increases cost nonprofits millions. Last year Congress began tinkering with revenue forgone - a warning sign that bigtime cuts w ere on the way.
As a result, nonprofits developed legislation that would take their costs out of the annual Capitol Hill turkey shoot and tie them to a permanent method of finance inside the Postal Service. Called "separate subclass," this legislation was torpedoed at the last hour in May. Days later the House decided to cut revenue forgone from $482 to $200 million - which it voted to do last week.
To his credit, Rep. Edward Roybal (D) of California saved the nonprofits by forcing the Post Office to offset the $282 million shortfall. But that measure only applies for one year. Next year, nonprofits are out on the streets - hence, the need to find a permanent answer to Mr. Toad's ride.
A Senate postal subcommittee, which begins meeting today, can help find a permanent solution.
One possibility is a "reduced markup" approach. In this plan, nonprofits are assessed, permanently, 30 percent of the cost of the overhead attributed to their mailings. For-profit and nonprofit mailers, however, would be in more direct competition; commercial mailers will pay more.
A better solution is the separate subclass option - resurrected when the Roybal measure went through. Subclass places nonprofit rates under the authority of the Postal Service. Eligibility restrictions are tightened - but rates would climb more slowly.
Congress's cut of $282 million is an extreme measure. Moreover, the cut, under current budget realities, is probably permanent. The Senate and House have an opportunity this summer to find a permanent solution. Otherwise, what happens next year with an estimated $500 million shortfall?