Cash-strapped cities look to nonprofits for revenue

More U.S. municipalities are trying to tap tax-exempt nonprofits, often using inconsistent or non-transparent means

By Bob Salsberg

Published November 29, 2010 10:15PM (EST)

A new report says financially strapped U.S. cities are increasingly looking to tap tax-exempt nonprofits for cash, but methods of collecting payments in lieu of taxes from these institutions often lack consistency and transparency.

The report, to be released on Tuesday by the Cambridge, Mass.-based Lincoln Institute of Land Policy, said more than 100 municipalities in at least 18 states are collecting millions in payments in lieu of taxes, including large cities such as Boston, Philadelphia, Pittsburgh and Baltimore.

The study says the payments can provide a critical revenue stream for cities, but are too often "haphazard, secretive, and calculated in an ad hoc manner."

The authors recommend that municipalities work collaboratively with nonprofits and develop equitable systems for determining what nonprofits should pay in lieu of taxes.

Bob Salsberg

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