Thursday, October 18, 2012

BIG’s Blog: This Is Getting Very Serious

Something today is very different. No, fundraising revenue isn’t coming in the way it used to. Yes, fundraising has become tough. But for fundraisers who are dependent on direct mail for the majority of their revenue, they have way more to worry about than just declining response rates. Try the U.S. Postal Service entering bankruptcy.

If you understand bankruptcy, you know it doesn’t necessarily mean the Postal Service will go out of business. Does the memory of General Motors come to mind? It means the Postal Service will go to court and declare bankruptcy and attempt to define a plan that the court must accept to emerge from bankruptcy as a profitable operating entity. Good luck with that.

But once the Postal Service enters bankruptcy, it will never be the same.

Here is the really tough news for nonprofit direct mail fundraisers: your postage costs will go up substantially. You and your trade associations can meet with the Postmaster General himself to plead your case to keep the nonprofit postal discount rate . . . but you’re pleading with someone who just rang up a $5.2 billion loss for the last quarter and has maxed out his $15 billion line of credit with the U.S. Treasury.

And talk about bad timing. Have you heard of a thing called sequestration, or, as it’s more commonly called, the “fiscal cliff?” Back last summer Congress created a super-committee to figure out how to lower the fiscal budget because they keep hitting their own borrowing limits.
Yep, the super-committee was a super-flop. And since the super-committee couldn’t figure out how to bring down the expenses of the U.S. Government, automatic across-the-board cuts start to kick in January 1, 2013.

So you see, Congress is otherwise occupied with how to keep entitlements, non-defense discretionary and defense spending from being hit hard across the board. Do you really think they are going to pay attention to the Postal Service?

Not a chance.

Look for the Postal Service to file for bankruptcy right after the first of the year.

And look for the nonprofit postal discount to go away immediately upon entering bankruptcy.

Sorry to be such a “downer” on a Friday, but you need to know how serious this is.

You do, however, have other choices. You don’t have to be dependent on the Postal Service. We’ve been saying this for over six years, and our clients…though most still use direct mail…are positioning for the future without mail. You can, too. We have another free, no-obligation Webinar coming up in late October that details an alternative strategy to direct mail fundraising. Drop me a note and I’ll see that you get an invitation.


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