Short on Cash, Cities and States Consider Taxing Nonprofits

Short on Cash, Cities and States Consider Taxing Nonprofits

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David Thompson, vice president of public policy at the National Council of Nonprofits, chalks up the growing movement in Connecticut and other parts of the country to tax nonprofits to tight city and state budgets.

“The recession never ended” in some places, he said. “States still have budget shortfalls. The states are cutting what they pay down to cities. Cities have shrinking tax bases. So they ask, ‘How do we expand our tax base?’ ”

But that question often ignores the social services that nonprofits provide and the other good they do in the community, which governments don’t have to pay for, Thompson said. “People who only look at the budget see nonprofits as a cost item.”


But Jim Klocke, CEO of the Massachusetts Nonprofits Network, said those numbers don’t take into account the in-kind contributions, such as college scholarships or free hospital care, that nonprofits provide communities.

“Some institutions’ community benefits are eight to 10 times larger than the requested cash amount,” he said.

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