Pittsfield study group isn't sure if nonprofits have the cash to donate in lieu of taxes
PITTSFIELD -- Members of the city's PILOT (Payment In Lieu Of Taxes) Study Group learned Monday that it's unclear whether local nonprofit entities have the capacity to bolster municipal government through donations.
Meeting for the second time, the 10-member group digested the presentation of statistics concerning nonprofits in the city, and the consensus seemed to be that a program seeking regular donations from the organizations won't be easily designed.
Michael Supranowicz, president of the Berkshire Chamber of Commerce, told study group members that there are more than 1,100 nonprofit entities in the county, but only 703 are defined as charitable nonprofits under state law, and of those only 347 have income of more than $25,000 annually, requiring them to file an IRS Form 990 tax report.
In Pittsfield, he said, only 17.9 percent of land parcels are owned by nonprofits, compared to 52 percent in Boston, which recently established a program for seeking set annual donations in lieu of taxes from nonprofits there.
Learning of that program, Ward 6 Councilor John Krol and Councilor at large Melissa Mazzeo last year proposed a study of nonprofits similar to one conducted in Boston several years ago. Mayor Daniel L. Bianchi established the study group with city officials, business leaders, officials from large nonprofit organizations and others in January.
If it is determined to be feasible here, the group is expected to recommend a PILOT program to the City Council and mayor at the conclusion of the study.
Supranowitz and other group members noted that, among the nonprofit groups are different classes of tax-exempt entities -- including the federal, state and city governments, religious organizations, those that are strictly charitable organizations, and institutions such as Berkshire Health Systems, which has both nonprofit property and property containing commercial entities that is taxed.
City Solicitor Kathleen E. Degnan has been asked to help the group determine which types of nonprofits would be most likely to be able to contribute and how financial details might be determined and assessed.
In Boston, Mazzeo and others said, large property owning institutions were asked to contribute based in part on whether the value of property met a threshold.
"Structured PILOT programs are not appropriate for all communities," Supranowitz said, adding that finding a formula for implementing one if there is a one-size-fits-all benchmark "gets tricky" and could prove unfair to some.
Another issue is that the typical surplus margin for a nonprofit is 2 percent or less for institutions like BHS, said Darlene Rodowicz, the health care organization's chief financial officer. But that includes the money typically set aside in reserve to keep the hospital's services and programs operating during difficult economic times and to fund upgrades and new facilities.
"These are complex relationships," Rodowicz said of the role of nonprofits within the community.
She added that the health care organization, the county's largest employer, stands willing to assist the community when asked and often has. And in-kind donations, such as in reduced health care costs and medical services that benefit city residents, are sometimes significant, she said.
"We recognize the need to be good citizens, and partners," Rodowicz said, adding, "I don't think we have ever said ‘no' " when asked for help.
"I think it has to be a collaboration," Mazzeo said.
She said her goal is to gather information from the nonprofits themselves about what they do and what they already contribute, and to stress the aspect of all being members of a community.
The group will meet next on March 27 and will invite representatives from a half-dozen large nonprofits to the session.
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