Reduced mailing rates for nonprofit foundations are now being scrutinized as the United States Postal Service continues to look for ways to cut spending as they face severe financial troubles.
New legislation proposed by Rep. Darrell Issa (R-Calif.) would gradually lower the discount on postage rates nonprofits have been receiving since 1951, when Congress first authorized the reduced rates.
The nonprofit advertising discount would be reduced by five percent a year, and 10 percent after six years, according to Issa’s “Postal Reform Act of 2011.”
Currently, eligible nonprofits in America receive a 40 percent discount on postage rates, which has been proven critical as most foundations use direct mail fundraising to garner support.
New rates would consequently “cripple” nonprofits, according to Jason Lee, General Counselor for the Association of Fundraising Professionals, as quoted by FOX News.
“Nonprofits are under siege from a budget standpoint as Washington tries to rein in excessive federal spending,” he added. “The assault on nonprofits will thwart their efforts to fill in the gaps for state and local governments helping the poor.”
The Alliance of Nonprofit Mailers, a U.S. national coalition of nonprofit organizations, also opposes the legislation.
“Phasing out the nonprofit rate discount ... would punish nonprofit mailers and the people they serve. It is unfair to punish nonprofits for Postal Service’s inability to control its own costs,” the alliance told Issa, according to FOX.
The executive of the alliance also revealed that with new rates, the nonprofits would most likely use less mail, which in the long haul would not benefit the Postal Service.
But spokesman for Issa, Ali Ahmad, revealed to FOX that with this proposed reform, $1.7 billion could possibly be saved every year.
“All options for cost-saving structural reforms need to be on the table right now,” he added, echoing Issa who previously stated that the Congress “needs to implement reforms that aren’t a multi-billion dollar taxpayer-funded bailout.”
Issa was looking to avoid the USPS’ plans to: eliminate retiree health benefit pre-payments, which cost the Postal Service $5.5 billion annually, and allow the USPS access to Civil Service Retirement System and Federal Employees Retirement System overpayments, which was estimated at $6.9 billion.
Though some members of the Postal Service agreed with Issa’s reforms, which also included a billion-dollar saving five-day delivery plan, others blasted his bill as “dangerously misguided.”
Louis Atkins, the president of the National Association of Postal Supervisors, said in a statement according to Postal Reporter News, “Mr. Issa’s legislation, by failing to deal constructively with the prefunding and pension overpayment issues, would only worsen the Postal Service’s deteriorating financial condition.”
Atkins also denounced the bill’s plans to create panels that would oversee the agency, like the Commission for Postal Reorganization and the Postal Service Financial Responsibility and Management Assistance Authority, which he believed would only result in more costs, not less.
Opponents were also highly critical of the $10 billion proposed loan from the U.S. treasury that would only place the USPS in greater debt.
Issa believes that his reform would save the Postal Service $6 billion a year and help avoid future taxpayer bailouts.
The USPS is expected to lose more than $8.3 billion this year, and another $8.5 billion in the coming year if no changes are made soon.