Nonprofit Newswire | How Tax Exempt Are You?

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August 18, 2010; Source: Huffington Post | One of the top nonprofit bloggers is Kelly Kleiman who writes as the Nonprofiteer. In this piece done for the HuffPo, Kleiman points out that municipalities throughout Illinois are looking at nonprofit property owners as potential sources of tax revenues. In the wake of the Provena Covenant Hospital decision in which the Illinois Supreme court decided that Provena didn’t qualify as a nonprofit for property tax purposes because it failed to provide a sufficient level of charity care, she reports that assessors are examining the nonprofit bona fides of many nonprofit property owners.

In Chicago and in a nearby suburban counties, courts are questioning luxury retirement communities to determine if they qualify as charities. Kleiman connected the dots, suggesting that nonprofit property owners should have expected that the implications of the Provena decision would eventually hit them, compelling them to prove how charitable they were to qualify for or keep their property tax exemptions.

Although Kleiman implies that assessors might be going for the gold, either sitting in nonprofit hospitals’ budgets or in the prime Gold Coast real estate occupied by the exemption-challenged retirement community, some questions do get at important issues in the nonprofit sector. For example, is a YMCA that seems to look and feel a lot like a private health club—and many Y’s have been questioned on that score—really a nonprofit? Should it be offering more than ellipticals and stairmasters for young professionals?

She begins to overreach when she wonders if settlement houses might not be considered charities because they get paid for their services by governments or clients, but her point is important. Without clear guidance from the legislature as to the content and amount of “charity” needed to qualify as a charitable use of real property, charities will have to make sure they ask themselves hard questions so that they can answer the questions of municipal and county tax assessors.—Rick Cohen