Local Governments Seek to Raise Revenues through Fees on Nonprofits

The National Council of Nonprofits reported that with revenues depleted, an increasing number of local governments have been trying to tap nonprofits for funds. This excellent article summarizes why nonprofits - as one leader of the Minnesota Council of Nonprofits testified - are feeling "death by a thousand cuts" due to a proliferation of fees and assessments from local government. As a YMCA leader explained: "Nonprofits have tax exemption for a reason - they provide service to the community that lessens the burden on government. We are partners with government and the community. But as these additional fees and assessments get assigned, it comes out of our donated dollars and resources."

Allegheny County Commission (Pennyslvania) recently voted unanimously to impose $13 million in fees on tax exempt property. The County Executive, however, vetoed the tax, saying it was illegal under Pennsylvania law. When the county solicitor agreed that the tax was unconstitutional, the Commission backed off - although several commissioners reportedly vowed to search for other ways to get money from nonprofits.

Even though Minnesota law recognizes that nonprofits lessen the burden of government and therefore exempts nonprofit property from taxation, Minneapolis has tried to be creative by instead imposing a "streetlight" fee on churches and other nonprofits.

In Kingston (New York), local officials are looking to follow this emerging trend of charging nonprofits for local services. The garbage collection fee, unofficially dubbed "pay-as-you-throw," would raise nearly $1 million in revenue for the city. Local officials have also considered additional fees for public safety and other municipal services.