New Orleans Nonprofit Property Tax Exemption Survey November 2011

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Marlene Daniels
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New Orleans Nonprofit Property Tax Exemption Survey November 2011 Changes to the nonprofit property tax exemption could undermine the ability of nonprofits to maintain programs and services, much

1 New Orleans Nonprofit Property Tax Exemption Survey November 2011 Changes to the nonprofit property tax exemption could undermine the ability of nonprofits to maintain programs and services, much less to expand them to meet the increased needs resulting from the lagging economy and policy choices being made at all levels of government. The exemption from taxation on property devoted to charitable purposes is based upon the value returned back to public sector. The mission work of exempted nonprofits saves government the expense it would otherwise have to shoulder at a greater cost to the tax-payers without the nonprofit leverage. At a time when there is an increasing gap between the amount of public funds to address public expectations and need, further eroding the savings that are realized by nonprofit-public partnership seems ill-advised. Nonprofits share the interest of a municipality to meet public obligations and improve its economic health for greater common good. Nonprofits not only add to the societal well-being of a community, but also directly to the financial status in specific, quantifiable ways via 20,236 nonprofit organizations in Louisiana and 95,000 employees statewide that feed the hungry, house the homeless, educate the illiterate, train the underemployed, enrich our culture and protect the environment and Louisiana s natural resources. The services delivered by these professionals leverage public dollars with revenue from self-generated fees, private donations, foundation support, volunteer goods and talents, and investments - therefore resulting in savings to our citizenry. LANO recently launched a New Orleans Nonprofit Property Tax Exemption Survey to determine the possible consequences of imposing a property tax on nonprofits. The results are contained in this report: Accuracy of assessments is vital in order to make informed policy decisions Potential tax liability and actions to offset that cost may do more harm than good Nonprofits have seen a decrease in funding Nonprofits contribute by leveraging private dollars to provide services on behalf of the City The nonprofit property tax exemption provides a unique and substantial public benefit as nonprofits address diverse and essential needs of communities. LANO s position is that any policy change must be thoughtfully considered to avoid farreaching unintended consequences on our communities by harming nonprofits that provide increasingly important services to our state. Page 1 of 6

G. I don't know 35% Over 5 years 3% 4-5 years 0% How Long Ago was Your Property Assesed? 3-4 years 4% C. 2-3 years 17% A. Less than 1 year 24% B.

While 41% of those surveyed responded that their property had been assessed in the last two years, the graphic below indicates that only 38 % of the assessments were official City

Done by a Private Real Estate Professional C.

2 G. I don't know 35% Over 5 years 3% 4-5 years 0% How Long Ago was Your Property Assesed? 3-4 years 4% C. 2-3 years 17% A. Less than 1 year 24% B. 1-2 years 17% Without accurate assessments of property owned by nonprofit organizations, gauging the implications of a property tax on nonprofits is challenging at best. While 41% of those surveyed responded that their property had been assessed in the last two years, the graphic below indicates that only 38 % of the assessments were official City assessments that can be used to accurately calculate property tax liability. Who Performed Your Most Recent Assessment? A. Done by the Orleans Parish Assesors Office 38% 24% 38% B. Done by a Private Real Estate Professional C. I don't know The bottom line is that government officials and the public lack reliable information on the value of exempt properties, other than homestead exempt property. This seriously hampers their ability to calculate the cost of exemptions, to perform a cost-benefit analysis of exemptions and quantify the impact of proposed reforms. Bureau of Governmental Research Report: The Nonprofit Margin Page 2 of 6

their potential tax liability as a percentage of their operating budget.

3 Potential Tax Liablity as a Percentage of Operating Budget 4% 10% 7% 28% 3% 48% A. Less than 10% B. 20% - 30% C. 30% - 40% D. 40% - 50% E. Greater than 50% F. I don't know Recognizing the limitations of accurately calculating potential property tax liabilities outlined above, survey participants were asked to use the what assessments they had to calculate their potential tax liability as a percentage of their operating budget. The New Orleans Assessors property tax calculator located on their website was the suggested means of determining potential tax liability. While 48% of nonprofits surveyed responded that there tax liability would be less than 10% of their operating budget, the consequences of the loss of those dollars are still troubling. Offset measures of those reporting a potential tax liability of less than 10% include: Eliminate jobs with cumulative salary levels ranging from $50,000 - $2,000,000 Loss of services including youth programs, programs for the visually impaired, affordable housing and arts and culture to approximately 27,800 people Consider selling properties and moving outside Orleans Parish Cumulative Actions to Offset Potential Tax Liability A. Eliminate a jobs B. Freeze or reduce employee salaries C. Reduce employee benefits D. Reduce number of programs or services E. Increase fee for services F. I don't know G. Other (if other, please explain in the box below) Series % 41.38% 37.93% 75.86% 31.03% 13.79% 20.69% Page 3 of 6

Axis Title Top 5 Respondents by Service Provision 35.00% 3 25.00% 2 15.00% 1 5.00% Series1, 17.

4 Axis Title Top 5 Respondents by Service Provision 35.00% % % % Series1, 17.24% Nonprofit organizations contribute vital services to their communities on lean budgets that would otherwise fall to government or the for profit sector to provide, if provided at all. Because nonprofits have no profit motive they are able to provide valuable community services at little or no cost to their clientele. When asked what services nonprofits would have to cut in order to offset the cost of a property tax, they responded: After School Programs for Youth Senior Citizens Programs Transportation of Disabled Vocational Training Meals Programs Alzheimer's Program Affordable Housing Development Offering Public Meeting Space Social Worker Case Management Leadership Training Community Development Elderly Care Rebuilding and Light Repairs for Homeowners AmeriCorps Infant/Toddler services We would likely have to completely discontinue our Youth Services activities, including summer camp (of which we are one of the largest single site locations in the city and established the city's very first summer camp) and the Teen Center, which provides year-round diversionary activities for nearly 100 teens, including tutoring, mentoring and recreational activities. We would also have to dramatically reduce the number of master's level mental and behavioral health counselors we have working with individuals and families in the most continually challenged areas of the city (e.g., New Orleans East), largely focused on helping families with issues that, if left unaddressed, will likely escalate to serious difficulties (e.g., much more expensive hospitalization and psychological/psychiatric services). ~ Keith Liederman, Kingsley House Page 4 of 6

24% Percent Change in Funding from FY09 - FY 12 A. 10% increase 10% 31% 11% 17% 7% B. 20% increase C. 10% decrease D. 20% decrease E. No significant change F.

As evidenced in the graph, 31% of survey respondents saw a 20% reduction in funding from fiscal years 2009 2012.

Despite the fiscal challenges nonprofit organizations face, they continue to contribute to the wellbeing of the City through valuable partnerships often at their own expense.

5 24% Percent Change in Funding from FY09 - FY 12 A. 10% increase 10% 31% 11% 17% 7% B. 20% increase C. 10% decrease D. 20% decrease E. No significant change F. I don't know Nonprofit organizations have not been immune to the economic downturn and lagging economy. As evidenced in the graph, 31% of survey respondents saw a 20% reduction in funding from fiscal years This decrease in revenue comes at a time when needs for services have increased, forcing organizations to do more with less in order to ensure the health of their communities. Despite the fiscal challenges nonprofit organizations face, they continue to contribute to the wellbeing of the City through valuable partnerships often at their own expense. 44% of survey respondents reported that their organization engages in contracts with the City of New Orleans. Of those organizations, 21% reported that City government underpays on contract services by more than 10%. 14% of respondents who contract with the City reported that the City imposes a match requirement on contracts. This demonstrates the added value of partnering with the nonprofit sector 501(c) 3 s are able to leverage philanthropic dollars and contribute to the City s ability to keep the cost of providing services to a minimum. City Contract Payment 25.00% % 15.00% 10.71% % 5.00% 14.29% Page 5 of 6

6 A rising demand for human services comes amid falling nonprofit funding. Can nonprofits meet this growing need? Not alone. Constructive, productive partnerships between all sectors: the business community, government and nonprofits - are necessary. Prepared by: Ashley Herad Civic Engagement and Policy Director Louisiana Association of Nonprofit Organizations (LANO) P.O. Box 66558, Baton Rouge, LA Tel ext. 222 Fax Ashley@lano.org Page 6 of 6

VARIETY CLUB OF PHILADELPHIA, INC. AND VARIETY CAMP AND DEVELOPMENT CENTER FOR HANDICAPPED CHILDREN, INC. COMBINED FINANCIAL STATEMENTS

VARIETY CLUB OF PHILADELPHIA, INC. AND VARIETY CAMP AND DEVELOPMENT CENTER FOR HANDICAPPED CHILDREN, INC. COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 VARIETY CLUB OF PHILADELPHIA,