November 8, 2010; Source: | Cash-strapped governments looking for ways to squeeze revenues from nonprofits may find a cautionary message in a ruling this week by the Georgia Supreme Court. The court decided that a nonprofit in Athens that earns money from rental fees, and uses that income to support social service programs, could not be denied a tax exemption by the county.

The decision reversed a lower-court ruling that said Nuci’s Space had to pay property taxes because the building it uses for programs aimed at preventing teen suicides also is rented out for private birthday parties, wedding receptions, and to musicians who use it for rehearsal space.

In overturning the Court of Appeals, the Georgia Supreme Court said Nuci’s Space should not be required to pay property tax even though some of the uses of the building were for non-charitable activities. It said that Nuci’s Space primarily serves a charitable purpose and so does the money it raises from ancillary activities.—Bruce Trachtenberg