In Tough Times Nonprofits Face What Feel Like Taxes

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April 24, 2011; Source: The Boston Globe | The Boston Globe reports that 40 of the city's largest nonprofits with property valued at $15 million or more have received letters from the city requesting them to make regular and voluntary tax payments based on the value of their holdings. The new plan requires the affected nonprofits, including those making smaller Payments in Lieu of Taxes (PILOTs) for years, to now pay up to 25 percent of what they'd be billed if they weren't exempt from property taxes.

City officials argue the change is meant to bring more fairness to the system. “This isn’t something we drew up on the back of an envelope. It’s something we put a lot of thought into,’’ said Boston Mayor Thomas M. Menino.

Boston is not alone is seeking to raise revenues from nonprofits, as Nonprofit Quarterly has previously reported. In Boston, nonprofits are especially tempting targets, because as the Globe notes, they own about 52 percent of the city’s land area. Under the new plan payments would rise from $15 million, which they paid this year, to $48 million over the next five years.

Although the reactions to the request for higher payments are mixed, Boston University president, Robert Brown understands the need for more revenue to fund city operations. “My primary goal in life is to make Boston University a better institution, but it can only be a better institution if the city thrives."

Richard J. Doherty, president of the Association of Independent Colleges and Universities in Massachusetts sounds a more cautious tone. “We have some boards of trustees that are asking, ‘What are the implications? Does this exist elsewhere in the country? Are there precedents we need to be considering? Are we heading down a slippery slope?’” —Anne Eigeman