In a conference call, both Michael Clark, president of the Nonprofit Coordinating Committee of New York, and David L. Thompson, vice-president of public policy for the National Council of Nonprofits and an expert on PILOTs, strongly objected to Halloran’s ideas.
“The state Appeals Court has ruled repeatedly,” Clark said, “that if you qualify for tax exemptions, the local government can’t change the criteria. And, if you aren’t taxable, you can’t make payments in lieu of taxes, because you don’t pay taxes.”
Clark said similar programs that were tried in Boston and Chicago were unsuccessful “once you focus on the nonprofits.”
“If you set up a program like that, it’s complicated to administer,” he said. “You have to monitor the payments, monitor the impact on the non-profit: How many people did they have to lay off. They don’t have a lot of money. The bottom line is there’s a cost side to PILOTs as well as a revenue side.
“You’re asking them to stop doing what they’re doing with the money and do something else,” Clark said. “So they’ll lay off staff, those staff will stop paying payroll taxes and in some cases you’ll lose the non-profits.”
Thompson questioned the idea of “cherry-picking” services such as police and fire.
“The reason charities are tax-exempt is that we are required to earn it every day by pursuing the public good,” he said. “Those who cherry pick rarely bring up free health clinics (and other services provided by hospitals). Nonprofits do a lot of things that government doesn’t want to do itself because nonprofits do it better and cheaper.”
Cities and towns are not paying the full cost of what the nonprofits are doing for them, Thompson said.
“We are usually losing money on the work we do,” he said.
The reason charities are tax-exempt, he said, is that they have to give up profits, privacy and politics.
Profits, he said, because “they return the money to the community.”
Privacy, because in order to engender the trust needed to raise needed funds, they need to be “more transparent than the government.”
And politics, because running campaign ads, engaging in elections and the like are given up when an organization become nonprofit.