Hotly contested among nonprofits, the topic of payment-in-lieu-of-taxes (PILOT) agreements is back in the local headlines, courtesy of Brockton’s Mayor Bill Carpenter. As outlined in a recent Boston Globe article (Brockton Mayor wants nonprofits to pay), Carpenter is asking 21 of the city’s major nonprofits to forge PILOT agreements, in order to stick to an earlier campaign promise not to raise taxes for the city’s residents.
Included in the Globe article is a response from Ward 2 City Councilor Tom Monahan, who said that despite their contributions to the community, nonprofits “drain public resources.” Monahan cited Brockton’s Fire Department, which he said answered 294 calls from the Father Bill’s & MainSpring shelter last year. “At $1,000 a call, that’s almost $300,000 right there,’’ said Monahan.
“The real question is where would the City of Brockton be, and at what cost, if not for organizations like Father Bill’s & MainSpring,” said MNN CEO Rick Jakious. “Squeezing nonprofit organizations that dedicate 100% of their resources to critical social safety net and quality of life issues is a short-sighted solution that doesn’t solve the underlying problem.”
As early as the 19th century, organizations that serve the public good have been exempt from having to pay taxes (get a refresher on the history of the nonprofit sector’s tax exempt status here). But with that privilege comes a responsibility to provide valuable services to the public, and address our society’s most persistent challenges.
PILOTs are not new to Massachusetts- more than two-thirds of cities and towns in the Commonwealth have a PILOT program. (In fact, we covered the topic in 2010 when a task force in Boston issued recommendations to encourage nonprofits to make payments in lieu of taxes.) And to be clear, PILOTs are a request, not a requirement. Requiring the payment would essentially make it a tax—exactly what nonprofits are protected against via their 501c3 status. But we’ve heard from several nonprofit leaders that what is positioned as merely an ask feels more like a bartering chip with local officials.
And then there’s the financial burden PILOTs place on organizations—many of whom are already watching their budgets get smaller and smaller. In the Brockton Enterprise’s coverage of the proposed PILOT (Mayor faces uphill battle for Brockton nonprofit tax payments), George Carney, a lifelong city resident and owner of the Brockton Fairgrounds, was quoted as seeing both sides of Mayor Bill Carpenter’s recent. According to the article, Carney has been making voluntary payments for decades to “give back” to Brockton. According to the Enterprise article, last year he paid $50,000 that he was not required to for his tax-exempt fairgrounds property. But he was quick to point out: “The people you are looking to get money from are struggling with their own budgets…It’s really putting an unfair burden on them and putting them in an awkward position.”
For now, Mayor Carpenter is sticking to his guns and opting not to raise taxes, which has Brockton’s CFO worried that the city’s financial outlook to be “downgraded from stable”.
Where do you stand in the PILOT debate? Send us your thoughts feedback@massnonprofitnet.org.
