January 27, 2014
As local governmental organizations look for ways to repair their budgets following the Great Recession, many are turning to the tax exemptions of nonprofit organizations. Like nonprofits, many local governments were dealt hard financial blows as state and federal funding was reduced in the last five years. They also lost sales tax revenue as businesses closed up and the economy slowed down.
As county governments and municipalities search for ways to increase revenue, nonprofit tax exemptions represent one of the few untapped resources. There has a been trend in some communities of exemptions for certain utilities and sales and property tax disappearing.
The Boulder Crest Retreat for Military and Veteran Wellness in Virginia recently received a nearly $20,000 property tax bill, since the country board has for years been denying tax breaks to nonprofits. Boston, Madison, Wisc., and Minnesota are all considering measures that would either reduce tax exemptions or add new fees, according to Governing magazine.
"The recession hit," David L. Thompson, vice president of public policy for the National Council of Nonprofits told The Washington Post. "And all of a sudden, nonprofits that were the anchor of the community and greatly praised by policymakers – 'Come to our city. Look at the great nonprofits we have!' – started being treated as scofflaws not paying their fair share."
Nonprofits should look to experts to help reduce their own budgets
New taxes mean more overhead for struggling nonprofits that have also been fighting to improve budgetary shortfalls. According to The Post, two-thirds of nonprofits in a national survey reported some type of payment to a local government in the past two years. In some cases, governments ask for payments in lieu of taxes, charge fees or require special-use taxes.
Nonprofits can consult with specialty groups on ways to improve their financial situation by measures such as opting out of state unemployment insurance pools, bringing in outsourced help to improve fundraising and budgets and mitigating for risk. As donations fall and fees rise, nonprofits will need to work to protect their own budgets.
Content presented by First Nonprofit Companies, the leading provider of state unemployment insurance solutions for 501(c)(3) nonprofit employers.
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Throughout our membership in the Unemployment Savings Program, First Nonprofit understood our demands, community dynamics, and the importance of seamless services; that allowed us to serve our constituents better.
Because INCS advocates for the operating conditions that allow charter public schools to provide high quality public education, partnering with First Nonprofit was an easy decision. First Nonprofit’s unemployment programs provide our member schools two operating elements crucial to their ability to provide high quality public education: savings and budget certainty. Capable, committed teachers are the key to student success. By participating in the unemployment insurance savings plan, charter public schools gain peace of mind and are able to invest more money in their teachers.
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NYCON members who use First Nonprofit’s programs enjoy enduring savings and improved efficiency. Our association knows that success, because from the beginning, we achieved the same great benefits. Great savings, seamless technology, and responsive service. NYCON highly recommends First Nonprofit’s remarkable unemployment solutions.
Visually Impaired Preschool Services has been a client of First Non-Profit since it was first offered as a benefit of VisionServe Alliance. We completed a thorough evaluation of cash savings to our agency before taking advantage of this wonderful benefit and it has been a very wise decision. Our experience with the processes from accounting to claims have been professional, expeditious and easy.
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The Ensight Skills Center has enjoyed working with First Nonprofit for several years. We are enrolled in their Unemployment Savings Program and although we have not required a lot of intervention, there have been a few times. I know others have dealt with the same problem of unemployment fraud over the last year and in our case, a call to First Nonprofit (they actually answer their phones) cleared up the issue. They also sent us a letter to send to all our employees telling them what they needed to do to prevent this in the future and protect themselves. What a relief! Over the years if I have questions or concerns, they are happy to listen, advise and help if they can. Another BIG advantage of using First Nonprofit is that all the money that is paid into the Unemployment Savings Program lives on my balance sheet as an asset. The money continues to be Ensight’s not the governments. First Nonprofit has certainly given me peace of mind.