Lawmakers debate over who should decide nonprofit status

Nonprofit organizations are everywhere in the community, but now Pennsylvania lawmakers are asking, “Who should get nonprofit status, and who should make that decision?”

Auditor General Eugene DePasquale says the answers to those questions could have a direct effect on your tax dollars.

Currently, Pennsylvania courts decide who gets nonprofit status, which comes with tax exemptions. A proposed state constitutional amendment would take that power from the courts and give it to the General Assembly.

DePasquale says the danger of that move is the possibility of lowering the defining standards for nonprofits. This would open the door to more tax exemptions, which could hit taxpayers hard.

“The more properties that come off the tax rolls, what you end up having is those local governments are either forced to raise taxes on the people that still live there, or they have to cut public safety services,” DePasquale said.

DePasquale studied 10 counties in Pennsylvania and found out they were not collecting $1.5 billion due to tax exemptions. Local government officials say they’re worried that number could go up.

But some nonprofits say the current rules aren’t consistent. Courts can rule one organization meets the requirements for nonprofit status, while ruling a similar organization in a different municipality does not meet the requirements.

“We are here to do good with the context of our communities,” Pennsylvania Association of Nonprofit Organizations Executive Director Anne Gingerich said. “And when we get distracted by having conversations about whether or not we’re even legal and how we’re able to operate, we’re not able to focus on our missions.”

Gingerich says those missions can save taxpayer dollars because nonprofit work can relieve the government of the burden of providing those services. She points to physical and mental health as an example.

“We don’t have the bureaucracy that government has,” Gingerich said. “So there are times we can serve more effectively and more efficiently.”

Both DePasquale and Gingerich say the public needs more information before this kind of amendment should pass.

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