Amid Red Ink, Tax-Exempts Asked To Add To Coffers State and local governments, eager to close their budget gaps, are increasingly going after charities and other tax-exempt groups. Government officials are proposing new fees on nonprofits to help pay for services and are challenging the exemptions these groups get from sales and property taxes.
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Amid Red Ink, Tax-Exempts Asked To Add To Coffers

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Amid Red Ink, Tax-Exempts Asked To Add To Coffers

Amid Red Ink, Tax-Exempts Asked To Add To Coffers

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This is ALL THINGS CONSIDERED from NPR News. Im Melissa Block.


And Im Michele Norris.

It's no secret that the recession has hit state and local governments hard, so now they're turning their attention to charities and other tax exempt groups. Government officials are proposing new fees on nonprofits to help balance their budgets and they're challenging the exemptions the groups get from sales and property taxes.

As NPR's Pam Fessler reports, nonprofits say their budgets are in bad shape, too, and that they can't afford to pay without cutting services.

PAM FESSLER: The letter to nonprofits in Concord, Massachusetts came in January from the town's Board of Selectmen. It said that local property taxes were so high they were driving residents away. So the board asked the town's nonprofits: its private schools, hospitals, charities and churches, if they could start paying their fair share.

Ms. VIRGINIA MCINTYRE (Member, Board of Selectmen): I guess we're just hoping that in times where people are economically really stretched, that to the extent that they're able, they can contribute.

FESSLER: But board member Virginia McIntyre says the response was not great. One arts group offered to contribute a thousand dollars, but most responded politely that they contributed to Concord in many other nonmonetary ways.

Ms. KATHI ANDERSON (Executive Director, Walden Woods Project): The land that is now protected is a wonderful resource, not only for people who live in the community but for people who visit the community.

FESSLER: Kathi Anderson is executive director of the Walden Woods Project. It preserves property including Walden Pond, made famous by Henry David Thoreau -who, she notes, once went to jail rather than pay a tax he opposed.

Anderson says she feels the town's pain but that her group is hurting, too, and would be hard-pressed to come up with the $89,000 Concord says it would owe if it paid taxes.

Ms. ANDERSON: This is a slippery slope because if, indeed, a donation is made then it implies that one supports the notion of having charities essentially pay taxes.

FESSLER: And that flies in the face of the long-time relationship between government and charity - the idea that nonprofits fill a valuable community role. Increasingly, that relationship is being challenged. Boston wants its universities, hospitals and nonprofits to pay 25 percent of what they'd owe if they weren't tax-exempt. Philadelphia is talking to its universities about similar payments. Kansas and Hawaii considered repealing tax exemptions for nonprofits. And Minneapolis has imposed a streetlight fee on nonprofits to pay for electricity and bulbs.

Tim Delaney, president of the National Council of Nonprofits, says this couldn't come at a worst time.

Mr. TIM DELANEY (President, National Council of Nonprofits): Corporate donations are down significantly. Individual giving is down. Foundation giving is down substantially.

FESSLER: And demand for charitable services is up. He says adding more costs will only hurt taxpayers in the long run because of the kinds of services, such as health care and food pantries, that nonprofits provide.

Mr. DELANEY: When we can't, then there's greater needs in the community. And when the needs get so severe, then we're going to find people demanding that government step in, then it's going to cost a whole lot more.

Mr. FRANK COMMISSO (Council Member, Albany, New York): We wouldn't need to have a police and fire department of the size we do if these institutions were not here.

FESSLER: But Frank Commisso, a council member in Albany, New York, says cities like his have little choice. More than half of Albany's property is tax-exempt because it has so many state offices, hospitals and universities. But he says they still rely on city services.

Mr. COMMISSO: They cannot have an expectation that we can maintain police and fire at their current levels if we don't get some sort of help.

FESSLER: So, Albany has set up a commission to find ways that tax-exempt groups can contribute more. Commisso understands that many small charities can't, but he thinks larger institutions - especially those with moneymaking activities, such as parking garages - can.

And Doug Sauer, head of the New York Council of Nonprofits, agrees that well-off groups should chip in more if they can.

Mr. DOUG SAUER (Chief Executive Officer, New York Council of Nonprofits): All it takes is public opinion to switch on this. So we want to protect the integrity of the exemption, but we also want people to be accountable for the privilege of being able to have exempt property.

FESSLER: He notes that people are angry when they hear about some nonprofit CEOs getting huge salaries and he doesn't want that to tarnish the image of the vast majority of nonprofits, which he says do important work even as they struggle to make ends meet.

Pam Fessler, NPR News.

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