Two separate reports recently have again placed nonprofits in the position as revenue raisers for local government.
DC Council member Mary Cheh last week sent a letter to the entire council advocating for a PILOT (payments in lieu of taxes) from city universities. Her letter states that by charging every city university a $100 fee per student per semester, the city could help balance its budget by receiving payments from nonprofits who, she claims, receive a number of benefits without paying taxes. In a separate interview with the Northwest Current, Ms. Cheh expressed an interest in extending these PILOTs to other types of nonprofits if needed to balance the budget.
On Tuesday, the Lincoln Institute on Land Policy, a research institute on land use and fiscal politics, published a report on the use of PILOT fees by local municipalities to pay down budget deficits. The article notes that many cities, such as Boston and Baltimore, have existing PILOT programs that generate revenue under the justification that city nonprofits are not currently paying regular taxes for land or utility usage. The report endorses the idea of PILOTs, but urges government to negotiate, not demand, the fees with local nonprofits and examine alternate ways to achieve the revenue before turning to them.
ASAE is opposed to PILOT fees as a tax by another name on a tax-exempt entity, and notes that such taxes hurt many nonprofits’ ability to carry out their tax-exempt purpose, especially in this down economy when government and citizens are even more dependent on them. Associations and nonprofits contribute much more to the local economy now than what PILOTs could raise; for more information visit our Associations Facts page.