Sunday, August 14, 2011

BIG’s Blog: GAO Adds Postal Service’s Financial Condition to “High-Risk” List

You have no idea how much I did not want to write another blog on the failing US Postal Service. But, as I travel around the country speaking to nonprofit organizations and groups, there is a “disbelief” mentality that the problems of the USPS are real and are quickly coming to a major showdown.

Can your direct mail fund raising organization SURVIVE a 40% increase in postage costs? Qualified nonprofit organizations get a 40% discount from the regular “commercial” postal rates charged to for-profit commercial mailers.

The end of July, the GAO issued a Press Release that they were adding the Postal Service to their “High-Risk” list. This is the strongest language the U.S. Government Accountability Office (GAO) makes about the financial condition and future solvency of a government entity.

Let me draw you a comparison from the recent news. When Standard & Poors downgraded United States government obligations from AAA to AA+, this was merely a private rating agency expressing their professional opinion about the credit worthiness of U.S. government obligations. In contrast, the GAO is the U.S. government’s accountability office.

So what are some of the concerns raised by Gene L. Dodaro, Acting Comptroller General of the United States and head of the GAO?

• There are serious and significant financial challenges currently facing the Postal Service.

• New technology is profoundly affecting services in both private and public sectors, including traditional mail delivery.

• Compounded by the current recession, the volume of mail being sent is dropping substantially, leading to a sizable decline in revenue.

• At the same time, the Postal Service faces significant infrastructure and personnel costs.

Mr. Dodaro went on to state, “USPS has relied on growth in mail volume to help sustain its operations, a strategy that has enabled it to remain self-supporting. During the last decade, however, business and consumers have increasingly turned from traditional mail delivery to electronic communication alternatives. Mail volume has bounced back after past recessions, but USPS’s forecasts suggest that this may not be the case this time as more and more postal customers embrace electronic options.”

This is about as straight forward and devastating as it gets folks. The USPS has said it will run out of funds this year. What is their fall-back “keep operating” plan? They will have to go to Congress for a bailout. What kind of bailout mood do you think Congress is in? Congress has their own debt problems to deal with.

What else can they do to raise money? How about cutting back the nonprofit postal discount?

Do you see how real this threat is?

Starting with my next blog, I will start sharing some of the technology and service ideas you will need to be implementing to “maximize” and “optimize” your mail to stay profitable as your mail costs are rising.


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