# How to limit the impact of changes to postal pricing

- Link: https://fundraising.co.uk/2012/03/28/how-limit-impact-changes-postal-pricing/
- Published: 2012-03-28T13:39:20+01:00
- Author: Howard Lake

With the well-publicised [postage price increase](https://www.fundraising.co.uk/royal-mail-increases-stamp-prices-30)
set to be implemented on 30 April 2012 and VAT (20%) to be applied to all forms 
of postage (excluding first and second class stamps) from 2 April this year, Royal
Mail’s financial difficulties are about to have a huge impact on charities. So how
do charities whose donations rely on direct mail minimize these implications?

## Scope of impact

From the perspective of direct mail, it may seem that there will be little impact
since most fundraisers are already working hard to ensure that their mailings are
zero-rated. However, if ‘thanking and banking’ is handled in-house or via a third
party, then the postage element of this activity will most likely now have VAT added.

Furthermore, in-house activity such as Gift Aid mailings, and any administrative
postage that results from reactivation, upgrade, or any telemarketing activity, 
will be affected. In fact, any posting carried out which mails on an account, will
be subject to VAT.

## Advertisement

## Minimising the implications

Here are a few tips to minimize the impact on your charity:

**1. Be sure to investigate the possibility of sending direct mail using a downstream
access provider**; a service most creative agencies and print providers offer. The
prices for this form of posting will increase in proportion with Royal Mail’s headline
increase, but there will still be savings made. So it is still possible to find 
worthwhile savings even for relatively small volumes, yet a number of fundraisers
have not pursued this.

**2. If zero-rated packs are not being used to handle the direct mail then there
needs to be reasons for doing so** that are worth more than a 20% increase in the
cost of postage.

**3. Liaise with the marketing agency and the fulfilment partner** about how to 
incorporate thanking and banking into the accounting for the mailing programme that
generates the activity. The way this will work will vary for each organisation. 
However, if fulfilment costs can be accurately attribute to a zero-rated campaign,
and invoicing consolidated to a single point, then fulfilment postage could also
be zero-rated.

**4. Treat internal activity such as Gift Aid communications like a direct mail 
campaign.** The project does not need to be outsourced in its entirety, but if it
can be accounted for as a discrete project, constructing a zero-rated pack as the
campaign vehicle, and outsource some elements of the execution, then it is possible
to zero-rate the associated postage. This aspect will require some care, so enlist
the help of trusted service providers when planning how to make this work.

**5. Examine and categorise all activity that results in a postage cost.** Involve
a trusted service provider to look at your options for zero- rating the more significant
categories. Take a particularly careful look at telemarketing and digital channels,
where it is most likely to incur VAT charges already

 

## Next steps

The next steps you need to take are simple but vital. First, you must brief the 
board, trustees, fundraising and admin colleagues about an uncontrollable cost increase
that will have a considerable impact on the organisation. Secondly you should meet
with key service providers for direct mail, fulfilment, administration, telemarketing–
ideally together – to review the impact, and agree a plan on how to work together
to minimise its effect. Only then will your charity be armed to take on Royal Mail’s
price increases.

_⌊Nick Pride, MD of DMS⌉⌊Nick Pride, MD of DMS⌉Nick Pride is Managing Director of
[direct marketing agency DMS](http://www.dmsagency.co.uk) which specialises in the
charity and not-for-profit sectors. The agency has more than 20 years’ experience
working with some of the UK’s best known and most trusted brands including The National
Trust, The Association for International Cancer Research (AICR), Cats Protection
and SPANA._

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