'Taxing' not-for-profit property

December 14, 2009
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Mayors of some of the largest cities in the state are organizing to ask the General Assembly to consider “payment-in-lieu-of-taxes” for hospitals and some other not-for-profits that don’t pay property taxes.

The mayors, including Fort Wayne’s Tom Henry, are desperate to backfill a revenue hole caused by capping property taxes.

Henry told IBJ reporter Kathleen McLaughlin for a story published in this week’s paper that while the group doesn’t want to tax churches, it is interested in targeting such church-owned ventures as nursing homes.

How do you feel about payment-in-lieu-of-taxes? Should not-for-profits be exempt from property taxes at all?


  • Inevitable Political Dynamite
    No sense trying to enact as "payments in lieu of"....as they would, in fact, be property taxes, and thus begins the fierce political battle that will make health care reform look like child's play; Hell hath no fury like a bunch of pissed-off church-goers. But, it WILL happen and churches, hospitals and others will have impressed upon them the fact their toilets flush to the same sewers as everyone else's and police and fire services work the same for them as the rest of us who pay for same via property taxes. Buckle your seat belts; it's going to be a bumpy ride!
  • An Idea Whose Time Has Come
    The world has changed and the moniker "not-for-profit" does not necessarily mean unprofitable. Many churches are multi-faceted businesses and their quite enviable revenues often support very large facilities and salaries; not all churches or non-profits are this way but many are. One possible formula might be tied to total payroll or the payroll of the top X employees. If a church can pay a preacher(s) a six figure salary they can afford to pay for the services they utilize.
  • short term v. long term
    Emergencies require temporary measures by which all affected people/orgs should help the city. But permanent tax changes should be taken only to address structural changes. namaste
  • Robbing Peter to pay Paul
    I seriously doubt that these changes will take place for churches any time soon. As the article points out non-profits could see an increased tax burden but churches were not part of the discussion. You must understand that under the law there is a very large distinction between a non-profit and a church. Not all non-profits are even tax exempt. But all churches are tax exempt. Over the recent past many churches have filed as a 501c tax exempt corporation, really quite unneccessarily. But you would see churches hit the doors in mass exodus if the law changed and refile themselves simply as a church entity.
    Sure, churches use municipal resources...and most also contribute heavily back into the communities they serve in. Before you point fingers at six-figure pastors, consider the good that churches do in communities through their offerings and missions work. When new taxes are levied, do you think the church will still be able to contribute to the local community in the same way? You can rob Peter to pay Paul, but the local community would suffer from taxing the church.
  • Leave the tiny charities alone
    I think any attempt to get a property-tax-like payment from small nonprofit organizations that own their own buildings is going to result in a lot of excellent organizations shuttering because they simply cannot afford to pay what's asked of them. People will be put out of work and vital services will go undone. Look at Noble of Indiana--they have a tiny building in Indianapolis, but they provide valuable services to families with developmentally disabled children and they find jobs for developmentally disabled adults (among other activities). What will happen to their clients if the organization has to shut down? What about Gleaner's Food Bank? They can barely afford to stay open as it is. Not all nonprofits are megachurches, giant hospitals or museums with lots of acreage like the IMA. Any payments requested will have to create tiers of nonprofits based on the amount of property and their annual income, and leave the small, yet very vital, ones alone.
  • Bigger picture than churches and charities
    People tend to use the term not-for-profit as a synonym for a church or a charity. I believe we should be examing all "tax-exempt" organizations. For example, if I'm not mistaken, Center Township has a significant number of "tax-exempt" properties and organizations -- IUPUI, Indiana Statehouse, State Office Building, hospitals, parks, monuments, museums and other cultural organizations, etc. The "for-profit" organizations in Center Township must pay taxes to support the infrastructure and public services provided to the "tax-exempt" sector. It seems that some type of "fee-for-services" be at least considered for these tax-exempt entities. Also, according to a study by the IU Center on Philanthropy 5 or 6 years ago, there are more than 10,000 registered non-profits in Central Indiana, and more than 60,000 in the state. Many of these provide valued services as well as jobs, but maybe -- just maybe -- there needs to be some scrutiny or consideration given to those organizations in some way helping pay for public services. Just thinking out loud.
  • Non Profit closing their doors
    What would happen to non-profit org's properties should they have to close their doors? Probably, those properties will go back to their municipalities who could then sell or dispense them to profiteers!! Ummmm

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