‘Good Neighbors’ Campaign Seeks Money From City Nonprofits

A number of local organizations led by Philadelphia Jobs with Justice launched a campaign earlier this week they say will help fund schools and other public services that’ve been cut in recent years.

The campaign, which they’re calling “Good Neighbors,” calls on “mega-nonprofits” to pay taxes to the city, which will, in turn, go to public services.

“There is money,” noted Gwen Snyder, executive director of Jobs with Justice, who organized the press conference, “and we need to make sure we go after it.”

The campaign, it was announced on the 4th Floor of City Hall on Tuesday afternoon, would require nonprofits like Penn and Jefferson to pay taxes on their acquired properties which do not pass the Hospital Utilization Project Test (or, do things like advance a charitable purpose; benefit a class of people who are “legitimate subjects of charity”; relieve the government of some of its burden; and other requirements as per a 1985 state Supreme Court decision).

Additionally, the Pennsylvania Supreme Court ruled in April 2012 that counties and municipalities may require nonprofits to demonstrate that they qualify as charitable under the HUP test for their tax exemption.

Many nonprofits are exempt from paying any taxes and, according to a recent Inquirer/Plan Philly study touted at yesterday’s press conference, own 10.8 percent of property in the city by value, or, about $13 billion of real estate. About $528 million in property taxes were not collected in 2012 due to nonprofit statuses.

The conference was attended by—and the idea is supported by—Councilwoman Blondell Reynolds Brown. Brown and Councilman Bill Green last month called for hearings on rethinking property tax exemptions for nonprofits in the city. Green has two bills which could help begin the process of getting large nonprofits to pay their “fair share,” as it was often called at the press conference.

The Good Neighbors campaign was just one of several ideas highlighted Tuesday to help save Philadelphia’s schools. Others included money from the Pennsylvania Liquor Control Board and a plan proposed by State Sen. Vincent Hughes (D-Philadelphia) which would help fund Philly’s schools through money obtained through Medicaid expansion. Gov. Corbett has blocked the federal Medicaid expansion plan, which is part of the Affordable Care Act. Philadelphia school officials recently asked for $120 million in additional funding from the state due to financial woes.

Follow Randy on Twitter: @RandyLoBasso

4 Responses to “ ‘Good Neighbors’ Campaign Seeks Money From City Nonprofits ”

  1. Frank Rizzo says:

    Oh that makes a lot of sense – so now the non-profits will leave Philly too. How about the City and the School District stop wasting 100s of millions of dollars instead? God forbid we should downsize our bloated City government and School District, or realize any cost savings whatsover. Of course, let’s instead tax the crap out of non-profits. Sure that’s the answer.

  2. Elmer Money says:

    The City of Philadelphia does collect from not-for-profit hospitals, the question should be how will the proposed PILOTs differ from the hospital assessments which Councilmember Tasco introduced with Bill number 080465 http://legislation.phila.gov/attachments/5316.pdf amending Title 19 of the Philadelphia code by adding a new chapter imposing an assessment on net-operating revenue of general acute care hospitals; this legislation was passed unanimously and authorizing legislation has been granted by the General Assembly with the passing of House Bill 1788 (2007-2008).
    From Fiscal 2011 Operating Budget, section 46, pages 43-50, Acute Care Hospital Assessment: http://www.phila.gov/PDFs/2011OperatingBudget45-57.pdf

    Five Year Financial and Strategic Plan For Fiscal Years 2013-2017, From the Office of the Director of Finance, Cash Flow Projections, page 11, Hospital Assessment Fund totals $123 million for FY2012 and $136.6 million for FY2013 http://www.phila.gov/pdfs/2012-5yearPlan.pdf

  3. Gwen Snyder says:

    Randy, thanks for attending the launch, and for being so thorough in your reporting.

    Frank, as impressed as I am by your resurrection, I think you’re missing the point of this campaign. No one is arguing that the city shouldn’t prioritize cost-effectiveness, but we do also believe that ‘cost-effectiveness’ shouldn’t be used to justify gutting the libraries, snow plowing, fire stations, schools and other services our communities truly need. We’re saying that if a nonprofit runs a non-charitable venture off a property, the government shouldn’t be subsidizing that property through a property tax exemption.

    And let’s be real, asking a place like UPenn to pay normal property taxes on properties used for things like parking garages and hotels is not going to cause them any real hardship. (Penn’s current endowment? $7 billion.)

    Elmer, thanks so much for your thoughts and your e-mail. A lot of people are confusing Good Neighbors with PILOTs, and I’m glad to get a chance to clarify. The Good Neighbors Policy isn’t a PILOT policy–it’s simply enforcement of the HUP test, which would require that all landowners–nonprofit or for-profit–pay local property taxes on properties that don’t serve the local community.

    Basically, we’re saying that nonprofit tax exemptions are a form of city subsidizing, and as a city we should reward tax exemptions only to properties that genuinely benefit people in our city. If your nonprofit is using a property to run a parking garage or rent office space to private practitioners, no one’s arguing that’s a problem–we’re just saying that the city shouldn’t be subsidizing that.

  4. Elmer Money says:

    To clarify, not-for-profit hospitals who are currently paying an assessment on Net Operating Revenue will be asked to again pay additional “taxes” based on property used outside their charitable purpose… which will be determined by whom? This request to pay appears to be double-dipping.

    Hopefully your organization will focus on groups outside of education and healthcare. Examples are provided below that might interest a review in determining whether there are not-for-profits that hide behind a label of CDC, Civic Association, Foundation or other designation yet simply hold property or as a mechanism to collect a salary while receiving contributions and/or Grant funding.

    I would like to request your group calculate the cost of providing charity care for all Philadelphia’s not-for-profits and list this information on your web-site as a usable guide in determining community benefit or where potential challenges to a tax exempt status would be appropriate instead of a vague statement.

    Hopefully the Good Neighbors campaign believes there is nothing wrong with challenging an organizations not-for-profit status especially when the amount of Grant dollars might potentially be used outside of a charitable purpose.

    Examples below might include potential differences in an organization’s mission versus their actual purpose/actions. Form 990, Assets – Line 10a, Land, Building and equipment…

    Ogontz Avenue Revitalization Corp – $7,171,942
    Organization’s mission: Community development programs, management of charter school, real estate development and property management in the West Oak Lane section of Philadelphia

    Haines Eastburn Stenton Corp – $5,392,837
    Organization’s mission: Real estate development in the West Oak Lane area of Philadelphia for the benefit of Ogontz Avenue Revitalization corporation which is a 501(c)(3) organization

    Kappa Alpha Psi Fraternity, Inc – $3,451,550
    Asociacion De Puertorriquenos En Marchia Inc – $3,285,383
    Turning Point for Children – $2,584,122
    Opportunities Industrializations Centers International, Inc – $1,972,351
    New Manayunk Corporation – $499,220
    Community Ventures – $246,043
    Schuylkill River Development Corp – $217,536
    The Food Trust – $86,028

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