NJBIZ recently reported that some public officials in Red Bank and elsewhere are calling for property taxes or other assessments on nonprofit entities as a way of raising revenue for municipalities (“Task force looks for ways to collect from tax-exempt nonprofits,” NJBIZ.com, April 20). It’s a tempting idea for cash-strapped localities: to tax organizations that they think don’t pay for the upkeep of the town. Unfortunately, this proposal is not only based on inaccurate assumptions, but it’s also misguided and counter-productive.
Nonprofits play a critical role in ensuring a strong social service and civic infrastructure, and are an indispensable part of a vibrant quality of life. Whether providing mentoring to youth, meals to homebound seniors, medical care, disaster relief, substance abuse prevention, education, foreclosure assistance, artistic and cultural enrichment, or preserving our natural resources, nonprofits fulfill a vital public function that would leave a gaping void were they not present. The property-tax exemption is an essential part of the public/private compact between government and nonprofits, an accommodation in exchange for the public benefit function that nonprofits serve.
Just as important, nonprofit organizations are significant employers and purchasers, pumping billions of dollars into New Jersey’s economy every year. Nonprofits employ nearly 10 percent of our state’s private work force, generating payroll and income taxes, and helping to reduce public assistance and unemployment rolls. Nonprofits purchase goods and services from local businesses; pay utilities, telecommunications and related taxes; and provide vital services to people in the community. Their employees live, pay taxes and patronize merchants in the area.
Far from a one-sided consumption of massive amounts of government dollars and services, nonprofits actually save the government countless dollars by providing job training, health services, food, shelter, counseling and preventive care; and by leveraging human and financial resources with private donations and volunteers.
Nonprofits are all too familiar with shrinking funding pools and rising expenses — a situation they have been facing for years. The economic downturn has wreaked havoc on nonprofits’ ability to provide services that are needed more than ever. In the Center for Nonprofits’ most recent survey, 73 percent of nonprofits said that demand for services had risen over the past year, and even more expected demand to keep rising in the coming months. Many have had to cut programs and staff, and a number of good organizations have closed their doors.
Government has continued to curtail its own role in providing critical services while simultaneously reducing funding for nonprofits and expecting organizations to fill the gaps. The simple reality is that taxing nonprofits would remove essential funds from already depleted organizations when people need them the most.
It’s no coincidence that when Smithsonian magazine was compiling its recent list of Top Small Towns in America, it actively sought towns with “high concentrations of museums, historic sites, botanic gardens, resident orchestras, art galleries and other cultural assets.” Red Bank was chosen as No. 3.
Our state’s economic challenges demand thoughtful, deliberate discussion and comprehensive solutions. Taxing nonprofits that are helping to preserve a fragile economy and keep a fraying safety net intact is not the answer. We welcome the chance to work collaboratively toward tax and budgeting policies that preserve vital programs and services and a high quality of life for all.
Linda M. Czipo, executive director
Center for Nonprofits