Short on Revenue, State and Local Governments Exert Pressure on Nonprofits

Short on Revenue, State and Local Governments Exert Pressure on Nonprofits

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"A lot of us on the task force kept saying we are sympathetic to municipalities with financial struggles, but we don't feel the nonprofit sector is the appropriate source of revenue to relieve those pressures," Brenda Peluso, director of public policy and operations at the Maine Association of Nonprofits, told Tax Analysts. "It's really just taking money and putting it in another pocket."

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In North Dakota, a similar bill (HB 1380 (Doc 2014-125)) would allow municipalities to levy special assessments on tax-exempt nonprofits for safety and emergency services. It was defeated in the House, but the taxation committee has expressed interest in revising the bill for consideration during the 2015 legislative session, said Dana Schaar Jahner, executive director of the North Dakota Association of Nonprofit Organizations.

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Delia Coleman, director of public policy and strategic communications at the Donors Forum, an Illinois association of nonprofits, said that nonprofits earn their tax-exempt status through the work they do in communities, helping those who fall through the cracks of the government's safety net.

Tinkering with that status would endanger their work, she said.

"With the decrease in funding that nonprofits have experienced over the past five years due to the recession, going after nonprofits for revenue really endangers the stability nonprofits provide for communities," Coleman said.

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"We feel we are being attacked from all directions," David Thompson, vice president of public policy at the National Council of Nonprofits, told Tax Analysts. "States are reevaluating their tax policies and looking at nonprofits. We see the frantic money grabs. They don't want to raise property taxes, so they ask who we can raise taxes on."

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