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Nonprofit Property Tax Exemption Position Statement May 2010

Issue
Exemption from property taxes is one of several forms of state and local tax exemptions that have benefited nonprofit organizations for many years. Nonprofit organizations rely on property and sales tax exemptions to provide vital services to their clients, many of whom are those most in need. 
 
The nonprofit property tax exemption has become an increasing source of tension between nonprofits and local governments across the country. Some view nonprofits as having an unfair advantage in the competitive marketplace—especially as some nonprofits grow in scale and/or increase their involvement in commercial activities. As reported by the Urban Institute, “revenue-starved” municipalities are threatening to revoke the property-tax exemption of charities and some are demanding payments in lieu of taxes (PILOTs). At the same time the public perception of property-owning charities such as hospitals, universities, and cultural institutions, as “big businesses” has grown. According to the Urban Institute:  “In the coming years, economic forces that currently undermine the traditional income- and sales-tax bases will magnify the importance of property tax as a source of revenue, increasing the controversy over exemptions for charities.”
 
Threats to nonprofit property tax exemption are growing as evidenced in continuing battles in states and municipalities throughout the U.S.  Statewide Associations of nonprofits have played a critical role in thwarting attacks. Recently, WNA led the charge in Wisconsin to restore the property tax exemption to real estate leased by charitable organizations to provide housing for low income and disadvantaged tenants.
 
Impact on Nonprofits and the Communities They Serve
Wisconsin Nonprofits recognizes that real estate property taxes are an important source of revenue for local governments.  At the same time, exemption from property taxes is critical to nonprofits in carrying out their charitable purposes. For many nonprofits, loss of property tax exemption would require drastic reduction in or elimination of services to residents of local communities. Others would need to raise the prices they charge for their services to populations that cannot afford the increases. Many of these services are those that local government cannot or choose not to provide. 
 
Our Position
The Wisconsin Nonprofits Association believes that property tax exemption continues to be an important benefit to nonprofits in fulfilling their charitable missions. We support initiatives that challenge threats to erode or eliminate the property tax exemption for charitable organizations. Wisconsin Nonprofits seeks to understand and share information about the impact of this issue on the communities, nonprofits, and individuals we serve throughout Wisconsin. At the same time, we support opportunities to bring greater understanding of this issue and welcomes opportunities to engage with state government and taxing jurisdictions to identify new solutions to the significant fiscal challenges facing the municipalities they serve. 
 
For more information: Mary Riordan or 608-772-5962