I don't believe that anyone has illusions that staging a competition comes without organizational costs, and it is entirely reasonable to expect all entrants to submit their materials in the appropriate format and to included self-addressed, postage-paid packaging for the safe return of those materials.
However, there are no circumstances in which an entry fee is justified: neither as a way of funding the competition itself, nor as a way of pre-selecting entries. Pre-selection is better done through a clear description of the contest criteria and materials required (that is to say, pre-selection is done on a musical basis and not on the basis of cash in a checking account). And using the fees to fund the competition is absurd: it is asking the weakest links in the music-financing food chain to ante up for everyone else.
Anyone planning a competition who is unable to raise third-party funds sufficient to cover both organizational and prize costs should simply not be in the business of staging a competition. Basta.
I made my first call for a boycott in December and have received nearly unanimous (if mostly private) support. But it has not yet been taken up by any of the organizations that are supposedly in the business of composer advocacy. So how about it, American Music