5/25/08

Times: Minnesota Court Ruling Unleashes a Crisis for "Charities"

The Times does more than report the news. It collates events into trends and reports on cultural shifts - like this one.

When University presidents and administrators pocket gigantic salaries and live off of expense accounts, are they employees of non-profits? Non-profits with $billions in the bank? Non-profits that give no charity? Non-profits that plan to charge ridiculous amounts for football tickets?

Something is seriously wrong in this regard with the new Rutgers football ticket plan:
The bill will run more than $3,000 for one of 852 club seats, and more than $17,000 for one of 28 four-seat loge boxes. The seat itself is only $650 for the seven home games, but the big bucks go toward the annual, partially tax-deductible gift.
Big bucks! Tax deductible - so that more of the same can be built, bought and paid for? It's not just me saying that something is wrong - something stinks in the state of non-profits. It's now a whole lot of officials charged with regulating the public good who are blowing their loud whistles:

RED WING, Minn. — Authorities from the local tax assessor to members of Congress are increasingly challenging the tax-exempt status of nonprofit institutions — ranging from small group homes to wealthy universities — questioning whether they deserve special treatment.

One issue is the growing confusion over what constitutes a charity at a time when nonprofit groups look more like businesses, charging fees and selling products and services to raise money, and state and local governments are under financial pressure because of lower tax revenues.

And there are others: Does a nonprofit hospital give enough charity care to earn a tax exemption? Is a wealthy university providing enough financial aid?

In a ruling last December that sent tremors through the not-for-profit world, the Minnesota Supreme Court said a small nonprofit day care agency here had to pay property taxes because, in essence, it gave nothing away.

The agency, the Under the Rainbow Child Care Center, charges the same price per child regardless of whether their parents are able to pay the full amount themselves or they receive government support to cover the cost.

“We were shocked,” said Michelle Finholdt, who founded the center in 1994 and scraped together the money to buy a building in 2002. “There are a lot of other organizations in our area that we’re similar to, and they are exempt from property taxes.”

The tax-exempt status of charities costs local governments $8 billion to $13 billion annually, according to various rough estimates.

And local assessors are not the only government officials scratching their heads over which groups deserve privileged tax status. Congress has threatened to impose a requirement that wealthy universities make minimum payouts from their endowments and raised questions about whether nonprofit hospitals are really all that different from their for-profit — and tax-paying — competitors.

And, concerned about the way some churches are spending money, the Senate Finance Committee has asked for detailed financial information from six evangelical ministries asking them to justify their tax exemptions.

Others are questioning whether some tax-exempt nonprofits, primarily universities and hospitals, have accumulated so much wealth that they should no longer be considered charities. In Massachusetts, where Harvard’s endowment has reached $35 billion in assets, legislators are weighing whether to impose a 2.5 percent annual assessment on universities with endowments of more than $1 billion. more...

2 comments:

John D. Enright said...

I agree too! Imagine that.

bryce said...

Too?
Did someone agree with Tzvee before you did, John?