Tag Archives: management

Hello, Cleveland!

Our recent article on religious denominations within the Jewish community was featured in yesterday’s edition of the Cleveland Jewish Times.

Read the article HERE.

Payments in Lieu of Taxes: Necessary Evil or Unfair Imposition?

Reposted from The Giving Institute Blog – May 23, 2012

Click HERE to download a PDF of this article. 

Today’s continued economic uncertainty has prompted bold actions by local governments as they struggle to secure necessary income while faced with substantial budget shortfalls, unpredictable tax revenues and critical services in dire need of funding. In this era of municipal belt-tightening, a rapidly growing number of local officials now look at previously untapped sources of revenue: nonprofit institutions.

Since Boston’s Mayor Thomas Menino first broached the issue several years ago, other communities – small, medium, and large – have followed suit and have turned to some of the country’s most significant nonprofits to augment the current tax base.

Image Source: http://american.com

This has become an unprecedented source of revenue as well as debate, especially as questions arise around the endowments and land holdings of some of the country’s largest nonprofits, with universities, museums, hospitals and other community resources being cajoled, negotiated with and sometimes even publicly assailed in the media.

This country’s 1.5 million nonprofit organizations represent and cater to a myriad of important causes and missions, and in return, they have traditionally received immunity from real estate taxes and other taxes through their federally-designated 501(c)(3) statuses. However, the notion that charitable institutions are off-limits to the tax collector has recently been cast off.

As a result, municipalities now see an opportunity to extract some much-needed revenue from nonprofit organizations. This phenomenon has been working its way across the U.S. under creatively phrased monikers such as “voluntary contributions” and “payments in lieu of taxes (PILOT).”

We first noticed the momentum towards acceptance of this new model about 15 months ago when we developed a then-controversial op-ed piece for the Giving Institute’s blog about PILOT.  Since then we have witnessed additional municipalities placing public pressures on their largest local nonprofit institutions. Most organizations are obliging, and only a few weeks ago a precedent-setting court decision undoubtedly propelled these controversial PILOT issues into the public arena.

The Mesivta Eitz Chaim of Bobov Inc. summer camp, located on 61 picturesque acres in Pike County, Pennsylvania, is operated by the Bobov Orthodox Jewish community in Brooklyn, New York. Between June and August, the camp provides classes and lectures on Orthodox Judaism as well as some recreational activities, though the camp is primarily designed as an educational institution.

Although the camp’s dining and recreational facilities are open to the public, camp representatives were unaware of neither Pike County residents using the facilities nor Pike County or Pennsylvania residents attending the camp.  As a nonprofit organization, the camp sought an exemption from real estate taxes, but Pike County and the local school district denied the camp’s request for an exemption based on the nature of the camp and its charitable status.

The Pennsylvania Supreme Court upheld two lower court rulings against the camp’s tax exemption. In order to receive an exemption, the Court held that a claimant must meet the definition of a “purely public charity” as measured in a 1985 Pennsylvania case (Hospital Utilization Project v. Commonwealth).

In Pennsylvania, an “institution of purely public charity” advances a charitable purpose, donates or renders gratuitously a substantial portion of its services, benefits a substantial and indefinite class of persons who are legitimate subjects of charity, relieves the government of some of its burden, and operates entirely free from private profit motive.

At issue in the case was whether the camp relieved the government of some burden, since the dining and recreation facilities were open to the public and the camp’s soccer fields, located outside of the camp’s gates, were used on occasion by the public. The Court affirmed that the occasional use of recreational facilities was insufficient to relieve Pike County’s government of some of its burden and made the camp’s property taxable.

This decision has the potential to be very important, especially in this challenging economic environment when many municipalities are cash-strapped. The implications from the point of view of the nonprofit are that local governments may look to charitable organizations as revenue sources. Furthermore, nonprofits that balk at payments in lieu of taxes may face a likely possibility that the municipality could challenge its nonprofit status, and possibly revoke it.

Here’s an overview of where PILOT programs are especially active:

Boston, Massachusetts

Boston has become the clear leader in implementing PILOT programs, collecting almost $17 million annually from a variety of cultural, educational and medical institutions, with annual payments ranging from a few hundred dollars from a VFW Post to millions from hospitals and universities. In 2010, 36 nonprofits provided “voluntary tax” payments to the city.

New guidelines promulgated by Mayor Menino’s PILOT Task Force increased the number of nonprofits asked to contribute and pushed nonprofit payments up by 24%. Boston University and other large landholders have “volunteered” payments for municipal services approximating 25% of what they would pay if they were a for-profit entity.

Chicago, Illinois

Chicago has slashed critical city services amounting to $417 million. Colleges, universities and hospitals are being approached, although organizations of all sizes are affected.

One prominent example is the 20-member nonprofit Austin Green Team. Since 1989, the Austin Green Team has maintained over one dozen gardens and two greenhouses in the Austin neighborhood on Chicago’s west side, providing beauty and a sense of serenity to more than 100,000 residents. Under the Mayor’s 2012 budget, the Austin Green Team’s water service fee waiver is proposed for revocation, threatening the viability and survival of the gardens. The proposed budget plan includes eliminating fee waivers for virtually every nonprofit organization in Chicago.

Worcester, Massachusetts

In 2011, Worcester Polytechnic Institute entered into a 25-year agreement with the city to annually fund $50,000 to maintain and improve a neighboring park. WPI had already been making annual PILOT contributions of $180,000, including a 2.5% increase built in annually over the next 25 years. WPI president Dennis Berkey described the payments as strengthening the quality of the relationship between the college and the city. WPI also received assurances from the city that for the next 25 years, no additional taxes would be levied on the institution. However, a more important aspect of the relationship was the positive publicity lauded on the school for its support of the city.

Syracuse, New York

In 2011, Syracuse University began making $500,000 annual payments on a 5-year, $2.5 million pledge to the city of Syracuse. Responding to the pleas from the financially strapped city, University officials agreed to be the first nonprofit in Syracuse to make a voluntary payment after the City Council began exploring taxing some aspects of the University’s newly expanded properties. According to City Council, even as the University further shifts the burden of municipal services away from taxpayers, “It’s time for the University to kick in a little more to support these services.”

Providence, Rhode Island

Due to unprecedented financial problems, the Mayor of Providence initiated a program designed to pursue tax exempt institutions for a “failure to sacrifice.” The natural target was the city’s largest landowner, Brown University, who since 1764, was “freed and exempted from all taxes.”

Recent negotiations have yielded voluntary payments from Brown in the amount of $31.5 million over 11 years. Brown owns 200 buildings in Providence valued at over $1 billion in total, and if taxed, would pay the city $38 million annually. As Providence Mayor Angel Taveras summed it up, “every organization, including tax-exempt institutions, must share part of the burden of saving our city.”

Even with a slowly advancing economic outlook, the landscape has changed and nonprofits are unlikely to continue to benefit from their open-ended special tax exemption. With this in mind, land-owning nonprofit organizations should consider the following:

  1. Be prepared. Charitable organizations should not assume that their nonprofit status creates blanket immunity from all taxation. Houses of worship, community centers of all types, camps and other agencies owning larger parcels of land may be targeted for voluntary payments.
  1. Budget now for PILOT. Nonprofits should plan on including PILOT payments that might represent “reasonable” contributions to the municipality and tailor their budgets and programming accordingly.
  1. Get out in front of the issue and use it to your advantage. Appearing as a “good citizen” is important to nonprofits, especially those that are large landowners. Tailoring the PILOT to garner positive PR can strengthen an organization’s community image as well as possibly enable special consideration from the municipality later on. Nonprofits of all sizes should expect governments to ask them to step forward and contribute voluntary payments or pay usage fees to cover municipal services, including fire and police protection and other services.

Social Media and Jewish Nonprofits: Missing in Action?

Reposted from eJewish Philanthropy – February 15, 2012

So much attention is focused today on technology and especially social media as a platform to inform, educate and organize. Not a day goes by without some mention of the dynamics of Facebook and Twitter, and even eJewish Philanthropy almost always includes citations about the power of technology for nonprofits. This has prompted us to conduct an unofficial survey of a number of Jewish nonprofits, investigating how they are utilizing social media and how it enables them to meet the demands that they and their leaders are facing. The picture is not entirely positive.

The bottom line, as summarized by Jim Gelles, of Membership Management Services, developer of MM2000, a synagogue software system used by more than 200 congregations: “most of the Jewish world seems frozen in the 20th century when it comes to being technologically advanced.”

The Third Annual Nonprofit Social Network Benchmark Report reported in 2011 that 92% of U.S. nonprofit organizations have a presence on one or more social networking websites. This does not come as a surprise. However, what shocked us is the alarmingly low rate of Jewish nonprofits that have embraced social media as viable communications and fundraising enabling opportunities.

In the last decade, online social networking has expanded beyond being used solely as a tool for individuals to connect to/with each other. Instead, nonprofits are transitioning to using Facebook and Twitter as ways for organizations to build a donor base and market themselves to supporters. In terms of driving and growing fundraising potential and results, social networking may well be the next frontier!

However, there is still a great deal to be learned about just how effective a tool Facebook and Twitter can be.

Our recent survey demonstrated a significant lack of human or dollar resources invested by Jewish groups into Facebook and Twitter. Very few synagogues even seem to have any presence on Facebook or Twitter, although they all have websites, many of which are reasonably interactive. Robyn Cimbol, director of development at New York City’s Temple Emanu-El, noted that her congregation was probably the first Jewish congregation to have a website but today they have no specific plans to foster Facebook or Twitter activities, citing other pressing priorities and no apparent demands from their 2,800 member households. “We have limited staff resources and capabilities for this,” she noted, “but we are gearing up ultimately to recognize social media as one communications opportunity,” she told us. She did emphasize that “a number of staff members do use Face Book … to communicate with specific constituents but it is not used Temple-wide.”

Facebook reports that 89% of 1.3 million U.S. nonprofit organizations boast a social networking presence, offering opportunities potentially for fundraising. However, fundraising on Facebook is still a “minority effort,” despite recent gains.

Some organizations are opting for a modified social media fundraising approach. According to Robert Strickler, the Donor Pages Product Manager at DonorPerfect Software, an increasing amount of non-profits is turning to what he calls a “donor driven” approach. His firm has developed Donor Pages, an online “friend to friend portal” where an organization recruits its supporters to set up a website where they can reach out to family, friends and colleagues and personally ask them to donate. A platform like Donor Pages would be especially useful for synagogues, he notes, where membership serves as a “viable community which could set up pages and fundraise within their own personal networks.”

“Using a page like this gives ownership to the online social fundraising experience,” says Strickler. “We find that this tends to be effective because it operates on a more personal level.” He added that DonorPerfect has over 200 clients, both large and small, using donor pages, and that some have raised millions of dollars through the system. However, of these, only about 10 or 12 are Jewish organizations, and he said they are not yet fully utilizing the program.”

Despite the lack of nonprofits actively fundraising using Facebook, some data speaks to how viable an option it is. According to this year’s Nonprofit Social Network Benchmark Report, four out of five nonprofit organizations find social networks a “valuable” fundraising option, yet they cannot exactly quantify why. This may be because only 9% of Facebook-using nonprofits measured a hard “return on investment” (i.e.: money raised or supporters recruited) for their social network usage. Therefore, estimates of fundraising successes via social media are hard to quantify.

Two organizations we contacted talked passionately about their experiences using social media. Avi Halzel, Head of the Denver Jewish Day School, noted that all of their events are publicized and communicated through Facebook, with a goal of reaching all of their audiences. “There is no real extra work for us,” he noted, because “we believe that this builds community and this is one of our key goals.” “While we cannot quantify income directly from our Facebook activities, we believe it’s working.”

“Our goal is one or two tweets and Facebook postings every day,” he added, “and we work hard to coordinate our messages accordingly.”

At Beth Tfiloh Congregation and Community Day School in Baltimore and its close to 1000 student PreSchool-12 day school, social media has become a high priority, especially to connect families and alumni with dynamic school activities. Mandi Miller, the director of development, predicts even much more significant attention to Facebook and Twitter in the coming months, especially as they look to their critical annual Spotlight Scholarship event in June. “For the past few years we have experimented with different ways to use Facebook and Twitter, recognizing that the major costs are staff time.”

Her acknowledging that devoting resources, especially of staff time, towards stewardship, maintenance and expansion of the online community and other outreach efforts, seem unacknowledged generally. Just like fundraising through direct mail, meetings or phone calls, the same rules of stewardship are just as critical. Most nonprofits have no specific budget for technology, including social networking, despite the fact that no organization can manage today without staying current with technology. Miller also points out that volunteers can serve as a very powerful resource to expand the organization’s use of social media.

The power of resources is evident in what the Nonprofit Social Network Benchmark Report calls Master Social Fundraisers, nonprofit organizations that have raised more than $100,000 on Facebook. Quite surprisingly, with 30% of these agencies having an annual budget of $1-5 million, they reported at least $100,000 received in financial support. Distinguishing this group of agencies is that they report they had two or more people on staff dedicated – at least part-time – to social networking.

Last week, the Jewish Futures Competition was announced by the Jewish Education Project and JESNA’s Lippman Kanfer Institute, in partnership with UJA Federation of New York. Perhaps some candidates for creative projects will be tempted by the $1,800 prize money to suggest dynamic ways that the Jewish community’s nonprofits can advance utilizing Facebook and Twitter arenas and thus capture more participation and dollars … perhaps even functioning on a par with non-Jewish nonprofits that seem to be light years ahead of them.

Twelve Insights About Giving in 2012

Reposted from eJewish Philanthropy – January 4, 2012

2011 has ended and, while true challenges remain, dire predictions of especially troubled times in the nonprofit world never seemed to materialize. What lies ahead for 2012? We predict another year of growth in philanthropy and another year for more giving.

As we look at our crystal ball for the coming year, however, we find certain predictions difficult to make. The never-ending roller coaster rides in the U.S. and world economies, compounded by an election year likely to impact on policies, taxes, and other factors that directly affect nonprofits and charitable giving, will continue to shake things up regularly. We certainly hope that an improving economic landscape may help push charitable giving to an even more positive direction but recovering from the Great Recession will not be easy.

One prediction about which we can be certain is the content of our bi-weekly contributions to eJewish Philanthropy. Here is a preview of what we will address:

  1. The Modern Jewish Woman Donor
    The evolution and new-found power of the MJWD are often overlooked. Studies confirm that women are increasingly influential in decisions relating to charitable giving and they routinely give better and more passionately than do men. While Judaism honors women, we will identify ways that women address philanthropy and why women are such good donors.
  2. Networking: The Key to our Giving Future
    Although we have written substantially in the past about the benefits of social networking, we cannot stress enough the importance of face-to-face contact between nonprofit leaders and potential donors in the Jewish community. We will look at approaches other than social media, largely because fundraising campaigns succeed as they cultivate and draw upon the strong sense of community and interpersonal relationships. Why do people give and what impacts on their decision-making? The interests and emotional connections of Jewish donors to the agencies/projects they support and the way that they support, are changing along with our Jewish communities, so giving patterns are likely to continue to change in the times ahead.
  3. Planned Giving
    While every gift is a planned gift, testamentary giving through wills, trusts and estates accounts for about $30 billion annually in the U.S. We will examine how donors can efficiently plan legacy gifts that ensure their charitable intent lives on after death. With a focus on our synagogues, we will question why we have seen a very slow development of “legacy programs.” How do we encourage deferred giving in the synagogue world, enabling them to catch up to other nonprofits that continuously advance in this arena? Why do Jewish congregations tend to shy away from talking with their members about estate gifts?
  4. Dressing Up Your Campaign
    Just in time for Purim, we will talk about changing the face of a nonprofit. Experts contend that rebranding should be done every 10-12 years. While people will dress up like their favorite Purim characters, nonprofit leaders need to consider serious questions relating to presenting their agencies as contemporary organizations with crisp and meaningful messages. What does your logo convey? How can we keep the stakeholders and potential contributors “on the same page?” We will examine the many ways to make your mission and vision stand out and reach the right audiences. While successful fundraising begins with a compelling story and good packaging, we will ask some experts to address what approaches have worked in the past and what may work even better in the future.
  5. What Donors are Really Thinking
    With personal tax deadlines front-and-center in April and with Passover approaching, we will talk with several philanthropists and ask a number of key questions that every nonprofit professional would like to know: how do they choose where to donate? How can a nonprofit get the attention of major donors? What are the “do’s and don’ts” when approaching a major philanthropist?
  6. The Ideal Development Director
    We are familiar with the fundamental roles of an organization’s development officer, “one who implements a strategic plan to raise funds for their organization in a cost-effective and time-efficient manner.” But what sets apart the successful ones from the others? Which ones survive in the tangled webs of annual campaigns, foundation research, grant-writing and stewardship of major donors? We will dive into what we believe are the characteristics of the most ideal development director.
  7. Engaging the Board
    We often wonder why so many people want to volunteer for a cause bigger than themselves. In so many JCC’s, Federations and synagogues, we hear board members discuss the importance of the Jewish community. Yet sometimes the message and direction from the organizational Boards are not always “in sync” with the organization’s mission and vision. This post will examine the role of governance, leadership and strategy.
  8. The Results and Trends in Giving in 2011
    In June, The Giving Institute will confirm the annual figures on the levels of philanthropy during 2011. The annual report will include key facts and analyses of the 2011 numbers and we will use the report to highlight innovations that Jewish organizations are taking to enhance philanthropy.
  9. A Jewish Look at Foundations
    An essential principle in nonprofit work is that operational costs are limited but programs are limitless. Our goal in this article is to consider how important foundations and donor advised funds (DAVs) can serve the nonprofit world. While some critics contend that these funds are warehouses for dollars, we contend that Jewish donors are especially good at securing the future through their strategic decisions and that their intentions live on beyond their years.
  10. The Anatomy of a Synagogue
    As we approach the High Holidays, we will look at American synagogues and how they are addressing fundraising in new and effective ways. But are our congregations truly transparent and are they being operated as well as other types of nonprofits? Although we will not identify any one specific congregation, we will offer some insights on how a modern synagogue might and should operate in 2012.
  11. Jewish Volunteer and Professional Leadership
    Strengthening and fostering volunteer leadership has taken on a new emphasis, but salary studies of nonprofit executives seem to favor men over women. What are the profiles of both volunteers and paid executives and how are they impacting philanthropy? We will focus on some provocative findings.
  12. A Light Unto the Nations
    Israel-focused philanthropic support by Americans is changing, especially as research validates that younger Jewish donors look at Israel differently than did their parents and grandparents. How should Israel-based agencies actively seeking charitable support in the U.S. adjust their efforts to be more successful and relevant? As we consider social media efforts such as Facebook and Twitter and other types of technological methods to secure funds and build support, we will talk with some Millennial donors who are truly making an impact.

Because the Jewish philanthropic world is constantly evolving, we will sprinkle other topics into our bi-weekly contributions. We hope that 2012 brings growth, stability and strength to every Jewish organization. We are honored to offer our knowledge to thousands who subscribe to eJewish Philanthropy and always welcome comments, questions and suggestions.