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Cities Seeking Handouts From Nonprofits

July 2, 2003

PITTSBURGH (AP) _ Cash-strapped cities nationwide are going hat-in-hand to nonprofit organizations for donations to help pay the bills.

A growing number of municipalities _ from Providence, R.I., to Palo Alto, Calif. _ find themselves asking for voluntary payments from hospitals, universities, museums and charities so they don’t have to raise property taxes.

Becoming charity cases themselves is a necessity for many cities. Many have already created or raised service fees and tapped contingency funds to keep up with rising routine costs, new homeland security demands and dwindling allocations from states and the federal government.

``There is a sense that the nonprofits are getting a deal and need to share the pain,″ said Katherine Long, a policy analyst with the Vermont Alliance of Nonprofit Organizations. ``There is a sense that they are bleeding the system.″

For the past three years, Baltimore has collected $20 million from 16 of the city’s largest nonprofits. Last month, Providence, R.I., which faces a $59 million deficit this year, persuaded four private colleges and universities to pay $50 million over the next two decades. Pittsburgh Mayor Tom Murphy recently floated the idea of nonprofits making voluntary contributions to offset a $60 million deficit.

Payments in lieu of taxes are nothing new _ Harvard has made voluntary payments to Cambridge, Mass., since 1928 _ but, at least anecdotally, it appears hard times have spurred cities to turn to nonprofits more frequently and for more money, said Abby Levine, a policy analyst with the National Council of Nonprofit Associations.

Since the mid-1990s, Levine said, there have been at least four dozen attempts by cities to collect payments from nonprofits. No one, however, has figures on how many nonprofits are paying up.

Cities vary in their success at getting nonprofit funds, though Levine acknowledges it can be hard for a nonprofit to say no when officials threaten to police and firefighter layoffs or cutbacks in garbage collection or snow removal.

``You don’t want to be seen as the bad guy,″ Levine said. ``You don’t want to be seen as not supporting the community. Some feel it will hurt their relationship with the government.″

Recent efforts in Montpelier, Vt., the nation’s smallest state capital, garnered four donations from nonprofits totaling about $13,000, a pittance compared to the city’s $7.3 million budget.

``I’m sure they’re just as strapped as the rest of us. I’m sure there are a lot more people using the services,″ said Jana Bagwell, head of finance for the city of 8,300.

Some nonprofits have accused cities of shaking them down.

Two years ago, Hales Corners Lutheran Church settled a lawsuit against New Berlin, Wis., alleging the city withheld building permits for the church’s new day care center unless the church paid a $4,000 fee instead of property taxes.

Others argue they do enough already.

Northwestern University doesn’t pay property taxes but pays $1 million annually in other taxes and provides police patrols, volunteers and business, said spokesman Al Cubbage. The school has battled with Evanston, Ill., since 1873 over property taxes and payments in lieu of taxes.

Nonprofits aren’t opposed to helping out a city _ as long as it’s voluntary, said Joe Geiger of the Pennsylvania Association of Nonprofit Organizations,.

``It’s not that we are unsympathetic with local government, but it is just wrong thinking to balance governments’ budgets on the backs of charities,″ he said.


On the Net:

National Council of Nonprofit Associations: http://www.ncna.org/

Pennsylvania Association of Nonprofit Organizations: http://www.pano.org/

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