Monday, May 26, 2008

$$$ Not-For-Profit $$$

The NY Times leads today with an article at how government officials are increasingly questioning whether nonprofit organizations deserve their tax-exemption statuses. At a time when nonprofits run businesslike operations, and some private universities (like the Big H up the street) have endowments that total billions of dollars, there is a lot of drooling over those big piles of monet. There are murmurs that it does not make sense for these organizations to retain a status that denies local governments property taxes and other revenues adding up to somewhere around $8 billion to $13 billion every year.
"Mr. May said that the determination process had become increasingly difficult, however, noting that the Mall of America, a major tourist attraction, was seeking tax exemptions as part of its plans to expand, arguing that it aids the state economy by drawing visitors.

“From our perspective in the assessment field, it’s harder to define what’s a nonprofit these days because there are so many different types, and many of them are doing the same thing for-profit groups that aren’t exempt are doing,” he said...

“The nonprofit sector is being pressed to be more business-like and to find new ways to fill the gaps between what government will pay and what services cost, but then assessors want to treat us like businesses, which pay taxes,” said Jan Malcolm, chief executive of the Courage Center in Minneapolis and a former state health commissioner.”

I can see the merits of both sides of the argument - there have been rumblings in the Massachusetts State House about taxing least ten Massachusetts universities with endowments over one billion dollars. And many tax-exempt churches have been acting nakedly partisan - i.e. stumping for political candidates and other not-for-profit no-no's. It'll be interesting to see what develops, though this is a state-by-state issue, so grad sweeping reforms are only likely to occur on the local level.

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