Postal Changes That Will Affect Nonprofit Mailers Stephen Kearney Alliance of Nonprofit Mailers National Catholic Development Conference October 11, 2016

Agenda Nonprofits rely on USPS USPS in a period of painful change Postal legislation in Congress Regulatory review starts Dec. 2016 How can nonprofit mailers participate?

Nonprofits rely on USPS 1/10 of all US Mail = 15 billion of 150 billion pieces 12.6B Standard, 1.4B Periodicals, 1B First Class ~$155B raised through the mail Direct mail more effective than digital (1/8 the money) Direct mail transformed nonprofit sector: quadrupled in 1980s, doubled in 1990s, again in early 2000s

Recession and exigent surcharge

USPS in a period of change: Mail volume stops growing Years <50 billion pieces: 164 (1789-1952) 50-100B: 27 (1953-1979) 100-150B: 7 (1980-1986) 150-200B: 12 (1987-1998) Years >200B: 10 (1999-2008)--peak 213B in 2006 Years back to 150-200B: 7 (2009-2015) 154B in 2015

USPS reductions: 2007-2015 Facilities -360 -54% Delivery routes -20,000 - 9% Post Offices w/ retail hours reduced 13,000 36% Work hours -331M -23% Career employees -204,000 -29% Non-career employees +31,000 +31% Total employees -173,000 -22% Administrative employees -25,000 -33%

in the room: USPS cost of labor Labor = 80% of USPS costs Collective bargaining and binding arbitration Do not reflect USPS financial situation Do not reflect over-compensation vs. private sector Arbitrator awards based on previous contracts Recent award: 40 months, 3.8% raises, COLAs, no lay-offs

Postal legislation Both Senate and House bills out of committee Raise postage rates Reduce postal retiree heath benefit costs Spread retiree costs over 40 years and invest in market Only Senate requires arbitrators to consider finances Slow down consolidations Encourage centralized delivery Non-postal services Costing methodologies

Regulatory review Review pricing regulation on 10-year anniversary Dec. 2016 Postal Regulatory Commission (PRC) to conduct open process 2 steps—(1) Is system meeting objectives and factors? (2) If not, what to change? Main focus on Consumer Price Index (CPI) price cap USPS and unions pushing hard to eliminate or raise the cap Customers will support importance of cap and limit damage Important for nonprofits to share their stories with the PRC

Objectives of USPS pricing regulation (1) To maximize incentives to reduce costs and increase efficiency. (2) To create predictability and stability in rates. (3) To maintain high quality service standards established under section 3691. (4) To allow the Postal Service pricing flexibility. (5) To assure adequate revenues, including retained earnings, to maintain financial stability. (6) To reduce the administrative burden and increase the transparency of the ratemaking process. (7) To enhance mail security and deter terrorism. (8) To establish and maintain a just and reasonable schedule for rates and classifications, however the objective under this paragraph shall not be construed to prohibit the Postal Service from making changes of unequal magnitude within, between, or among classes of mail. (9) To allocate the total institutional costs of the Postal Service appropriately between market-dominant and competitive products.

Alliance of Nonprofit Mailers Coalition of nonprofits since 1980 Represents nonprofits to Congress, USPS, PRC, US Court of Appeals Ensures nondiscrimination against nonprofits Works to retain nonprofit preferred rates Keeps postal rates reasonable and service reliable Shares information on nonprofit mailers with policymakers and regulators Shares postal information with nonprofits

For nonprofits, by nonprofits

How can you participate? Submit your story to the Postal Regulatory Commission about your mission and reliance on mail in early 2017 Respond to Alliance calls to action Tell your story in the Smithsonian National Postal Museum’s online exhibit, America’s Mailing Industry: www.postalmuseum.si.edu/americasmailingindustry

Submit your story to a Smithsonian exhibit

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