logo
    • Magazine
    • Membership
    • Donate
  • Racial Justice
  • Economic Justice
    • Collections
  • Climate Justice
  • Health Justice
  • Leadership
  • CONTENT TYPES
  • Subscribe
  • Webinars
    • Upcoming Webinars
    • Complimentary Webinars
    • Premium On-Demand Webinars
  • Membership
  • Submissions

Boston’s Universities Shortchange City Government

Steve Dubb
August 8, 2018
Share
Tweet
Share
Email
Print
By Bill Rankin [CC BY 2.0], via Wikimedia Commons

August 3, 2018; Boston Herald

Last week, Boston residents testified at a City Council hearing demanding tax-exempt nonprofit institutions pay their “fair share” under the city’s payment in lieu of taxes (PILOT) program. A coalition of Boston nonprofits and community groups, the PILOT Action Group, indicates that the “49 largest institutions in the city have failed to pay over $77 million in promised payments under the PILOT program.”

In 2017 alone, the group estimates the shortfall to be $17 million. As a percentage of the city’s budget, this is modest. But it would help the city meet resident needs. As Enid Eckstein and Jonathan Rodrigues write in their report, Boston’s PILOT Program, A Fair Deal for Residents, even $5 million would cover the city’s entire playground renovation budget, or pay for 5-10 miles of new bike lanes, or paving 17 miles of city streets.

PILOTs can be controversial, since nonprofits are typically, although not always, exempt from property tax. (For example, this New York City website notes explicitly that, “Federal 501(c)(3) status alone does not automatically qualify you for the [property tax] exemption.”) PILOTs are most common in the Northeast, but many communities use them. A Lincoln Institute of Land Policy report found that, “As of 2012, at least 218 localities in 28 states had received PILOTs, amounting to more than $92 million per year.”

For our part, NPQ has long acknowledged that nonprofits, while meriting tax exemptions, also have obligations to localities for which PILOTs might be appropriate. Back in 2002, NPQ wrote that, “A healthy PILOT payment ensures that the local community is not, by virtue of foregone local taxes, subsidizing to an unfair degree the broadly accrued public benefit of educating a student body that comes from and will eventually locate themselves all over the world.”

Boston’s policy, developed by a city task force with full nonprofit participation back in 2010, seems to have struck a reasonable balance along these lines. Based on the task force’s recommendations, city policy was introduced in January 2011 wherein nonprofits with less than $15 million in real estate assets were not expected to contribute any revenue to the city, but those with more were expected to contribute 25 percent of the property tax rate. This standard was to be phased in over five years. Nonprofits that provided offsetting community benefits could further cut their payments in half.

The 25-percent standard, although clearly an estimate, was not entirely arbitrary. Rather, as the city of Boston’s website details, the payments were essentially meant to cover the direct share of the costs they bore for basic city services from which the nonprofits directly benefited, like police, fire, and snow removal. As Eckstein and Rodrigues explain, the concept was that “Institutions should contribute for the cost of city services such as snow removal, police protection, etc. Given that these services constituted about 25 percent of the city’s budgets, institutions would be assessed 25 percent of what would otherwise be their real estate taxes.”

Sign up for our free newsletters

Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

The payments are, legally speaking, “voluntary,” but all large nonprofits were expected to contribute. As the city website says, the goal was to set a “standard level of contributions…to be met by all major tax-exempt land owners in Boston.” All, not some; standard, not variable.

With a few exceptions, nonprofit hospitals have respected the formula, with hospital contributions equaling 94 percent of the expected amount. Look at nonprofit universities, however, and compliance plummets to 61 percent. Sutherland notes that in 2017, “Harvard was requested to pay $6,091,588 for 2017 but actually only contributed $3,201,702. Boston College paid $335,252, which is $1,410,098 less than the requested amount in 2017; while $8,052,510 was requested from Boston University and $6,100,000 was received. Northeastern University paid $1,300,000 which was reported to be $4,181,710 less than the requested PILOT amount.”

Eckstein says the institutions can afford to pay. “We believe very much that these institutions have a responsibility in our city. We believe the PILOT program was a start when it was established seven years ago to look at what is the responsibility of these institutions to our city.”

In an editorial, the Boston Herald was less than sympathetic to the city’s nonprofit universities, opining, “It is ridiculous that these institutions are not meeting their obligations and thus depriving Bostonians of valuable city services and opportunities. It is unfair on its face.”

Councilor-At-Large Anissa Essaibi George agrees, saying “We should hold institutions accountable.” Essaibi George adds that the city council has requested more data from the nonprofits and will take up the issue again soon.—Steve Dubb

Disclosure: The author has volunteered for the Boston Ujima Project, which is a member of the Pilot Action Group coalition.

Share
Tweet
Share
Email
Print
About the author
Steve Dubb

Steve Dubb is senior editor of economic justice at NPQ, where he writes articles (including NPQ’s Economy Remix column), moderates Remaking the Economy webinars, and works to cultivate voices from the field and help them reach a broader audience. Prior to coming to NPQ in 2017, Steve worked with cooperatives and nonprofits for over two decades, including twelve years at The Democracy Collaborative and three years as executive director of NASCO (North American Students of Cooperation). In his work, Steve has authored, co-authored, and edited numerous reports; participated in and facilitated learning cohorts; designed community building strategies; and helped build the field of community wealth building. Steve is the lead author of Building Wealth: The Asset-Based Approach to Solving Social and Economic Problems (Aspen 2005) and coauthor (with Rita Hodges) of The Road Half Traveled: University Engagement at a Crossroads, published by MSU Press in 2012. In 2016, Steve curated and authored Conversations on Community Wealth Building, a collection of interviews of community builders that Steve had conducted over the previous decade.

More about: colleges and universities payments in lieu of taxesManagement and LeadershipNonprofit News

Become a member

Support independent journalism and knowledge creation for civil society. Become a member of Nonprofit Quarterly.

Members receive unlimited access to our archived and upcoming digital content. NPQ is the leading journal in the nonprofit sector written by social change experts. Gain access to our exclusive library of online courses led by thought leaders and educators providing contextualized information to help nonprofit practitioners make sense of changing conditions and improve infra-structure in their organizations.

Join Today
logo logo logo logo logo
See comments

Spring-2023-sidebar-subscribe
You might also like
Hierarchy and Justice
Cyndi Suarez
Salvadoran Foreign Agent Law Threatens Human Rights Movements
Devon Kearney
Charitable Tax Reform: Why Half Measures Won’t Curb Plutocracy
Alan Davis
Healing-Centered Leadership: A Path to Transformation
Shawn A. Ginwright
Into the Fire: Lessons from Movement Conflicts
Ingrid Benedict, Weyam Ghadbian and Jovida Ross
How Nonprofits Can Truly Advance Change
Hildy Gottlieb

NPQ Webinars

April 27th, 2 pm ET

Liberatory Decision-Making

How to Facilitate and Engage in Healthy Decision-making Processes

Register Now
You might also like
Hierarchy and Justice
Cyndi Suarez
Salvadoran Foreign Agent Law Threatens Human Rights...
Devon Kearney
Charitable Tax Reform: Why Half Measures Won’t Curb...
Alan Davis

Like what you see?

Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.

See our newsletters

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

NPQ-Spring-2023-cover

Independent & in your mailbox.

Subscribe today and get a full year of NPQ for just $59.

subscribe
  • About
  • Contact
  • Advertise
  • Copyright
  • Careers

We are using cookies to give you the best experience on our website.

 

Non Profit News | Nonprofit Quarterly
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.