Understanding the Changes to Unrelated Business Income

By: Doris Kerr, Firm Administrator

On October 10, 2018, the Postal Regulation Commission (PRC) approved a proposal to increase the United States Postal Service rates for shipping and mailing service fees. The new prices, rising by up to 10 percent, will vary by product and take effect January 27, 2019.

Price changes include raising the cost of a first-class stamp by 10 percent from 50 cents to 55 cents each. Some items, such as postcards, will remain at 35 cents while the price letters weighing more than 1 ounce, will decrease.

This rate increase is an effort to keep the Postal Service competitive while providing the agency with additional revenue. As a reminder, the Postal Service does not receive tax dollars for operating expenses; instead, they rely heavily on the sale of postage, products, and services to fund its operations. In addition, mailing service prices are influenced by the Consumer Price Index, while shipping service prices are adjusted based on market conditions.

An analysis by the alliance of nonprofit mailers found the increase will also raise other classes of mail by about 2.5 percent. Overall, shipping services rates will increase 5.9 percent for priority mail and 3.9 percent for priority mail express.

Impact on Nonprofit Organizations

Organizations, but especially nonprofits that rely heavily on bulk marketing mailings will feel the impact of the 2019 rate increases. Nonprofit organizations should prepare and budget for the cost of their bulk outgoing mail to increase twice the rate of inflation. They also need to consider the cost of including a return envelope to facilitate donations as these will also incur a higher first-class letter rate.

If you need guidance on how to meet these challenges, please call the experts in our office.

Doris Kerr, Firm Administrator
302.478.8940
DKerr@btcpa.com