ACR NEWSLETTER

PILOTs and Their Possible Unintended Consequences

BY: Sue Santa, Senior Vice President for Public Policy, The Philanthropy Roundtable

A new paper published last week, “The Charitable Property-Tax Exemption and PILOTs”, by the Urban Institute Center on Nonprofits and Philanthropy and Urban-Brookings Tax Policy Center caught our attention.

Often here in Washington, we focus on Congress, the Administration and proposals that could, in time, affect the charitable sector. The Urban Institute paper reminds us that state and local governments are not just proposing measures, they’re acting upon them, and the impact is immediate. 

The paper notes that what may have started as an effort by state and local governments to identify untapped sources of revenue has evolved into a re-examination of the relationship between local government and the nonprofit organizations that serve their communities:

“The issue of the property-tax exemption for nonprofit organizations and payments in lieu of taxes has expanded beyond temporarily cash-strapped cities asking nonprofits for money. This issue has led state and local governments to reexamine their relationship with local nonprofit organizations. This in turn leads to academic questions about the definition of a charity; who benefits from the nonprofit property-tax exemption; and the best solutions to the current situation.”

Evelyn Brody and her colleagues are correct – the issues on the table go far beyond the search for revenue. Those of us who believe in the important role that charities play in our society - not only providing services but also allowing donors to express what they value in their communities through their giving - should be concerned about the implications of the conversations and actions taking place across the country, from Washington, DC to local governing boards.  Active participation in these conversations by the charitable sector, with all its unique facets, is important before sea-changing decisions are made.

Also read: The Coming Battle Between Nonprofits and Government in The Motley Fool.

Further Reading

• The Charitable Property-Tax Exemption and PILOTs (pdf)

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