Across Michigan, nonprofits are being required to pay taxes on property due to local assessor's interpretations of charitable work.
Many nonprofits (foundations and social service providers alike) assume that 501c(3) status from the IRS automatically provides exemption from local property taxes. The reality is that ultimate judgment on property tax exemption in Michigan is in the hands of local assessors - and the local assessors are charged with interpreting what is often a subjective question: "What is a charitable institution?"
As a result, over the past two years the number of contested nonprofit property tax exemption cases has risen to more than 40 being considered by the Michigan Tax Tribunal. These cases cover all parts of Michigan and a wide diversity of nonprofits, ranging from childcare facilities to assisted living facilities and more.
Most charitable nonprofits do not budget for paying local property taxes, which is resulting in tax bills that are enough to sink an organization. Moreover, the subjective nature of interpretation from assessor to assessor poses bigger questions around clarifying decision making on both the nonprofit and assessor sides. For CMF members that own their own facilities or support nonprofits that own facilities, solving this question is a high priority. While at least three bills have been introduced in Lansing to help solve individual cases, CMF has been assisting the Michigan Nonprofit Association (MNA) in the development of legislation that will provide a comprehensive fix - clarity for both local nonprofits and assessors in making decision on applications for property tax exemption.
Legislation is expected to be introduced later this month with bi-partisan support. But legislation is only part of the solution. In May, CMF and MNA will also be launching a toolkit to help foundations and their grantees explain to local assessors the charitable services they are providing, as well as help inform assessors in evaluating property tax exemption applications.
Want to dig deeper?
- Currently, local assessors utilize six broad criteria as defined by the Wexford Case, to evaluate property tax exemption. Read the highlights.
Flint Water Crisis Update
Last week, C.S. Mott President & CEO, Ridgway White, Hurley Medical Center/Michigan State University Director, Pediatric Residency Program, Dr. Mona Hanna-Attisha, and NAACP President & CEO, Cornell Brooks, presented on the Flint Water Crisis to a national audience at the Council on Foundations conference. Here is an up-to-date look at the crisis response.
Where we are with... State and Federal Funding
This past week, a federal energy bill moved to the U.S. Senate, devoid of up to $250 million of originally proposed dollars to be utilized towards Flint and other communities facing drinking water issues. Members of the Michigan congressional delegation remain optimistic about other federal appropriations beyond the energy bill, and Governor Snyder will be asking the Michigan congressional delegation to “reboot” efforts.
As part of Governor Snyder’s 75-point action plan to help speed Flint’s recovery, $30 million in state funding is moving forward to be allocated towards Flint resident water bills. The funding will come in the form of a credit to their city water bill, and will not cover use of sewage lines.
Where we are with… Philanthropy Support
Contributions to the Flint Child Health & Development Fund remain a high priority to assure critical interventions for Flint’s most vulnerable residents today and well into the future. As of Friday, April 15, the fund had raised $5,011,939, representing 13,941 gifts.
In addition to the Fund, a collaborative of philanthropy, community, and government committed to building a 21st century model for community services is seeking insights from community services programs that have demonstrated high outcomes. A learning scan is underway, and should you have proof points to contribute, please contact us.
Where we are with… Water Quality
In Washington last week, Dr. Mona Hanna-Attisha, the pediatrician who originally helped expose rising lead levels in Flint children, stressed that the water quality problem is not over. As stated by Dr. Hanna-Attisha, the EPA action level for lead in water is 15 ppb. Just this past week, a house tested for 11,070 ppb. Despite improvements in quality, the water supply is still failing to meet federal standards.
One issue that remains is that the system needs more water moving through it to remove the loose deposits from the water. A flushing aid program is under consideration and likely to be announced this week. It is designed to incentivize residents to use more water so that the water system can flush contaminants and be coated with anti-corrosion chemicals. With water bills in the hundreds of dollars per month, it will take strong incentives to realize this plan.
As the news cycles exhaust, there is valid concern around losing momentum and diminishing the collective sense of urgency to addressing these critical immediate and long-term needs. Beyond bottled water, filters and testing, scaled, systematic and coordinated efforts are being put into place to serve all residents. A primary focus has been placed on children, but the lens of seniors and other vulnerable community residents remains critical to address, too. CMF members - including the C.S. Mott Foundation, the Community Foundation of Greater Flint, and the Michigan Health Endowment Fund - have stood at the forefront of this crisis and are helping to pave the way for a cross-sector, sustainable solution, but many more contributors are needed given the magnitude of the problem and the long-term nature of the damage. Those looking to be involved, please contact us.
Demonstrating Demand for Impact Investing Products at the Community Level
At the start of the month, The Kresge Foundation launched Kresge Community Finance, a $30 million program-related investment (PRI) finance offering available to two key organizational types working to expand opportunities for low-income people in America’s cities.
Candidates for the PRI offering will be selected through a competitive Request for Proposals (RFP) process. The RFP is open exclusively to certified Community Development Finance Institutions (CDFI) and quasi-public or private Development Finance Agencies (DFA). Successful nonprofit applicants will also receive a net asset grant equal to five percent of the amount of their loan.
According to Kimberly Cornett, managing director of Kresge's Social Investment Practice, through this RFP "Kresge is looking to work with financial and development institutions on the ground that know their communities’ needs, to fund projects that will make a direct impact on those populations."
Insights expressed by Cornett and Joe Evans, the Kresge Social Investment Team's portfolio manager, are echoed by learnings from the CMF Impact Investing Task Force, including:
• Oftentimes, the capital markets don’t work for the people and places who need it most
• A key hindrance to wider investor participation in community development is a lack of standard investment products
Eligible organizations can submit a Letter of Inquiry to The Kresge Foundation through April 29.
Community Foundation of St. Clair County Launches Reverse Scholarship Program
Content excerpted and adapted from Community Foundation of St. Clair County
Many communities in Michigan are struggling to retain college graduates and lose out on their talents toward economic growth and prosperity. In late 2013, when Randy Maiers was serving as the interim director of the Huron County Community Foundation, discussion began among the donors and constituents of the Huron County Community Foundation about what, if anything, could be done to attract young people back to the Thumb Region. The result was a simple brainstorm that might transform the world of traditional scholarships.
From the start the Community Foundation of St. Clair County, Huron County Community Foundation and Sanilac County Community Foundation have all worked together as a coalition to address the talent drain and the Reverse Scholarship program was born from this collective work.
Traditional scholarships are awarded and paid on the “front end” of a student’s career. At that time, there are no guarantees the student will complete studies in their chosen field, graduate from college or return back to their communities to help contribute to growth and prosperity.
A “reverse scholarship” is essentially a talent retention program and would pay students on the back-end of their college career, after they have completed a degree in a STEAM related field, but only if they agree to move back home and work within the St. Clair County.
Learn more about the fund, including application details here.