Nonprofit Property Taxes: Clarity for All
We have been closely following developments of the nonprofit property tax exemption issue, as more nonprofits have been receiving property tax bills due to local assessor’s interpretations of charitable work. In April we told you how more than 40 contested nonprofit property tax exemptions cases were being considered by the Michigan Tax Tribunal. Since then, legislation has been introduced to attempt to remedy this problem, with the intent of offering clarity for charitable organizations when it comes to property taxes.
Senate Bill 960 was introduced on May 11 by Republican State Senator Jack Brandenburg, 8th District. It spells out charitable purposes for which organizations can be tax exempt. These purposes include:
- The advancement of education
- The advancement of religion
- The promotion of health and wellness
- The relief of poverty
- The erection of public buildings or other public works
- The promotion of a governmental purpose or the alleviation of burdens or responsibilities that would otherwise be borne by the government
Senate Bill 960 also clarifies criteria that constitutes a nonprofit charitable organization:
- Are exempt from taxation under section 501(c)(3)
- Are primarily or solely organized for charity
- Offer charitable services to a particular class of individuals without condition based upon health, ability to pay, or other characteristics
- Serve a charitable purpose
- Charge no more for charitable services than is reasonable necessary to maintain the operations of the organization
- Has an overall nature that promotes charity
Why It’s Important
If passed, this legislation not only clarifies into law what constitutes charity and a charitable organization, but offers clarity for tax assessors.
Our state has more than 2,000 tax assessors, who commonly follow the guidelines for charities noted in a Michigan Supreme Court case, the Wexford case.
If Senate Bill 960 goes on the books as a law, it would offer a clear view of tax policies for charitable organizations and more consistent policy implementation. Nonprofits can use this bill to better explain their work’s charitable purposes when it comes to tax policies. Fighting tax bills in court consumes charities’ time and resources, as some court cases last years and can be extremely costly. This results in time and money taken away from nonprofits’ abilities to carry out work in their communities. It's an issue that may affect your grantees as well as other nonprofits serving their communities.
Can your grantee explain how their organization falls within the guidelines of a charity? Knowing the value of the services they provide will clarify their charitable status to tax assessors. Knowing the impact of the work is important as it will help your grantees clarify for assessors and stakeholders.
Nonprofits do not have to fight the battle to preserve tax exempt status alone. Other organizations, both in and out of Michigan, have stories of unjust tax bills or governments trying to exact Payments in Lieu of Taxes (PILOTS) in order to collect funds. David Thompson of the National Council of Nonprofits stated that “the more we talk, the better we all are” because when organizations team up and tell their stories to fight these issues, “they usually win.”
What you can do
As many lawmakers prepare to adjourn for the summer, and many to campaign, let them know the value of the work of your foundation and your grantees and the importance of tax exempt status.
Stay tuned, this summer the Council of Michigan Foundations and Michigan Nonprofit Association will share a toolkit to help all charitable organizations articulate their charitable purposes.
Want to dig deeper? The Johnson Center for Philanthropy shared this: Why Should We Care About Tax Policy?
Climate researchers believe extreme weather patterns may be in Michigan’s future, which could mean extreme heat events, flooding and more in the coming decades. While climate change and its possible effects continue to be researched, experts believe there are real health and community risks in our future. A report by the Michigan Department of Health and Human Services and Great Lakes Integrated Sciences Assessments Program (GLISA) states if the climate change models are on track, our state is facing potential health risks.
Climate-based public health threats include:
- Heat-related illnesses
- Water-borne illnesses
- Respiratory diseases
- Diseases spread by mosquitoes and ticks
- Extreme weather-related injuries and carbon monoxide poisoning
Detroit Health Chief Dr. Abdul El-Sayed shared his concerns about what we are doing to our environment and public health earlier this year when Marathon Petroleum asked the Michigan Department of Environmental Quality (DEQ) if their Detroit refinery could increase emissions.
The health concerns are real. El-Sayed noted that “the health consequences of air pollution in Detroit are staggering,” as the city has some of the highest asthma rates in the state. Following civic engagement about the public health hazard, Marathon announced it would lower the level of pollutants, promising to spend $10 million to achieve it.
Detroiters Working for Environmental Justice and other leaders have joined together in the Detroit Climate Action Collaborative, launching a community-based climate action plan to address community needs, noting “preparedness action is a cost-effective action and economy-building action.”
Recently Kimberly Hill Knott, the project’s director, told Michigan Radio without action Detroit could face more events like the 2014 flood. “Our climatology shows us that if we don’t do anything to address climate change, by the year 2020 we will see as many as 250 heat-related deaths per year,” Knott said in the interview.
What can we do? Experts with GLISA recommend building up strong social networks in communities and making sure our neighborhoods and cities are healthy and safe. We can proactively engage with our communities now as we work to learn what will be needed for public health concerns in the future.
The Michigan Department of Health and Human Services shared key areas to target:
- Protecting vulnerable populations, and being mindful of environmental justice concerns
- Encouraging communities to collaboratively grow in a healthy and sustainable way
Want an in-depth look at environmental and health issues in our state? Check out the Health Funders Affinity Group and the Green and Blue Network, a learning community for foundations interested in the environment.
Reading Between the Lines
Education affects communities, economic development and much more. Research shows economically successful states have invested in improvements in education and have high rates of reading success for students.
Success for our students is vital to building our future with good jobs and wages. But according to a report recently released by Education Trust-Midwest, a nonpartisan education research and policy organization, Michigan is falling behind, particularly in reading.
The report is highly focused on fourth-grade reading results because of the important milestone of being able to read well by the completion of third grade.
- In 2003 Michigan ranked 28th in fourth-grade reading
- In 2015 Michigan was ranked 41 in fourth-grade reading
- The state is projected to fall to 48th place by 2030 if we don’t address the crisis
In about a decade, Michigan has gone from being a fairly average state in elementary reading and math achievement to ranking within the bottom ten states. Interestingly, assessment data suggests that Michigan is witnessing systemic decline across the K-12 spectrum, regardless of socio-economic status or race. While the focus of Michigan has been on other urgent issues, such as economic development in Detroit, the Flint water crisis, etc., we cannot afford to ignore this fundamental area.
What the Department of Education is saying:
Fortunately, Martin Ackley, spokesman for the Michigan Department of Education, has expressed optimism that current efforts to change the trajectory will be successful. "The Education Trust is making some predictions we're not willing to accept," Ackley said. He said a current effort by the MDE and the state Board of Education to transform Michigan into a top 10 performing state in 10 years — coupled with Governor Rick Snyder's creation of a 21st Century Education Commission — will identify the steps the state needs to take to turn things around.
The state Board of Education approved a set of 31 strategies in February that they hope to implement, which includes the following:
- Parents, teachers and students should sign an agreement that outlines individual academic and personal goals for students
- Schools should be run more efficiently so more money goes into the classroom
- The state should expand access to publicly funded early-childhood programs
- The state should expand access to free adult education services and family advocacy support programs
Governor Snyder’s 21st Century Education Commission was formed with the goal to analyze top performing education systems in the nation, identify issues impacting Michigan’s academic success, and recommend changes to restructure Michigan’s education system. The 25-member commission includes representatives in education, business, government and nonprofit communities who have a particular interest or expertise in education. The group will focus on “how Michigan’s system of public education is organized, governed, funded, and held accountable for successful education outcomes.” A final report will be shared by early 2017.
Along with these governmental advances to addressing our state of education, of course the philanthropy community continues to support important work that influences policy and makes a difference. For example, one of the McGregor Fund’s priorities is their Cradle to Career funding area, supporting Detroit-area programs that work to improve education. W.K. Kellogg Foundation supports, among many educational programs, the Ready for School program, which works to ensure children are kindergarten ready so they can hit the ground running. These are just a few of the programs intended to help Michigan children with their education and reading, as Michigan works towards educational improvements.
Leelanau Township Community Foundation Supports Solar Panel Project
Excerpted from a Traverse City Eagle Record article. Read the full article here.
The Leelanau Township Community Foundation made a high schooler’s solar panel plan a reality after approving more than $12,000 for the project.
The student, Caleb Brown, plans to install solar panels near Northport Public School, to provide about 3 percent of the district’s $40,000 annual electricity bill. It will also serve as a learning tool for students.
“We were very impressed,” Ruth Steele Walker, the board chair of the Community Foundation said. “There are a lot of people in Northport focused on reducing our dependence on non-renewable energy and that’s something that we as a foundation see as a real benefit to the community.”
Scholarships, charitable organizations and schools are regular targets of the foundation's generosity. Steele Walker said Brown’s idea was an ideal place for the funding.
“We’ve always been concerned with the environment in Northport,” she said. “There’s also the educational piece of it that motivated it as well. Our kids do some great projects that have never been seen before.”