As part of a ten-step program to encourage job growth, Boston Mayor Thomas Menino recently proposed a credit for nonprofits that hire unemployed Boston residents. Not-for-profits that hire the currently jobless would receive a $1,000 or $1,500 credit deducted from the money nonprofits are asked to pay in lieu of property taxes.
According to published reports, Boston University (BU) pays the City of Boston $5.1 million, and Boston’s top five employers – four hospitals and BU – contributed more than $8.6 million (combined) to the city last year, despite their tax-exempt status. It boggles the mind to think that these new credits, on top of the expense of hiring and paying a person, PLUS the prospect of not hiring the best person for the job (potentially leaving the organization exposed to discrimination lawsuits), will make a dent in unemployment or a dent in the nonprofit’s payments to the city. This proposal is fiscally out of synch with reality but it wouldn’t be the first time someone has suggested a program aimed at nonprofits that garners little but press coverage.
Meanwhile, the debate continues to rage about PILOT programs (Payments in Lieu of Taxes.) In certain neighborhoods in Boston (and many other municipalities), there is such a high density of property owned and operated by nonprofits that there is serious pressure on the remainder of the residential and business properties to absorb the cost of the services being provided to everyone into their tax rates. Boston, like other municipalities, needs to realistically balance the additional cost of services with the contributions nonprofits make. Nonprofits:
- Contribute positively to the local economy
- Create an environment that positively influences the value of residential properties which in turn impacts the tax rate
- Attract people to the area
- Offer classes and training
- Provide facilities for events
- Present scholarships to local residents
This new plan smells a little too much like trying to kill two birds with one (tiny) stone. As Amy Poehler and Seth Meyers from Saturday Night Live’s Weekend Update might say, “Really!?! Mayor Menino!?! Really!?!”
Leigh Tucker, CPA is the managing director of the nonprofit practice at Accounting Management Solutions and the founder of Nonprofit Executives, a networking group.