Nonprofits Pay Fees Despite Tax-Exempt Status, Survey Finds

Despite their tax-exempt status, a large number of organizations pay fees, taxes, or payments in lieu of taxes (PILOTs) to local governments, a new report from the Johns Hopkins University Listening Post Project finds.

Based on a survey of 358 organizations working in the fields of children and family services, elderly housing and services, community and economic development, and arts and culture, the report, Taxing the Tax-Exempt Sector: A Growing Danger for Nonprofit Organizations found that 63 percent of respondents reported paying some kind of fee, tax, or PILOT. Among large organizations, the figure was 73 percent, while 48 percent of small organizations reported making such payments.

Nearly one-fifth of all respondents, many of them housing and service organizations for the elderly, were subject to field-specific taxes. In addition, 14 percent of all respondents indicated that they were aware of proposals in their state or locality to impose new taxes or fees on nonprofits, while 43 percent said they were concerned that their state or local government would adopt such fees or taxes over the next year.

While results varied based on organization size, field, and geographic region, 9 percent of respondents reported paying PILOTs. The figure rose to 26 percent among elderly housing and services groups and 20 percent for organizations in the Northeast.

"Taxing the Tax-Exempt Sector: A Growing Danger for Nonprofit Organizations" Johns Hopkins Center for Civil Society Studies Press Release 04/18/2011.