• Is Maine's Governor Wise to Tax Some Nonprofits?

    by Bill Ballas


    In Republic, Plato remarked that “necessity is the mother of invention.”  That pragmatism is evident today in Maine, and it may further cloud the tax-exempt status enjoyed by many 501(c)(3) organizations.


    Specifically, Maine’s Governor, Paul LePage, recently submitted to the state’s legislature a budget for FY16/17 that levies a property tax on nonprofit hospitals, private colleges and summer camps.  If the Governor’s wished-for budget becomes law, these nonprofits would pay property taxes on their holdings above $500,000 while receiving a 50% discount off the standard tax rate.


    Mr. LePage believes Maine’s homeowners are unfairly subsidizing the 501(c)(3) orgs who will be most affected by the tax.  According to the Wall Street Journal, 51.4% of Maine’s property taxes go to funding state and local government.  The national average is 29.7%.


    The Governor is using the FY16-17 budget as his tax reform plan.  In it, he calls for $62 million in budget reductions for localities believing that it would reduce waste by forcing local governments to share more services. The tax on nonprofit property would help municipalities pay for police, fire, snow removal and other services.


    Mr. LePage’s budget/tax overhaul also lowers the top individual and corporate tax rates, issues tax credits for low-income residents, and broadens the number of goods and services eligible for Maine’s sales tax.


    Currently, all states exempt 501(c)(3) organizations from property taxes believing that they improve the quality of life for residents and provide services that government would otherwise have to offer.  Some states, like Virginia, let municipalities choose which nonprofits should be taxed. 


    In many states, though, nonprofits voluntarily agree to pay municipalities for the services they use in exchange for their tax-exempt status.  And, just three years ago, the mayor of Providence, RI got an agreement for voluntary payments from Brown University and other colleges. 


    According to the Lincoln Institute, more than 200 localities have negotiated payments with nonprofits in lieu of taxes.  About 75% to 80% of these organizations are in the northeast, with the largest share being in Massachusetts and Pennsylvania.  They add that Maine has a high-concentration of tax-exempt academic and medical institutions.


    Opponents of Governor LePage’s property tax measure argue that it would cost the state more in lost services than it would generate through taxes.  The Auburn Food Bank (Auburn, ME) said if the property tax were in effect today, it would owe $24,500 and be forced to reduce the amount of food it dispenses.


    Foes of the tax add that the result will lead to staff layoffs at 501(c)(3) organizations, higher tuition and health care costs, reduced services to community members, and force many tax-exempt organizations to move to other states.  Others wonder whether the property values placed by the state would be fair.


    In his book, New Frontiers of Philanthropy, Lester Salamon and other experts explore new ways for philanthropy to combat rising poverty rates and many other ills in an era of shrinking government funding.  If you’d like to explore how these ideas could be put to use at your agency, drop an email to billballas@wsballas.com

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  • How Corporate Phlanthropy Improves Corporate Profits      

    by Bill Ballas                                            

    by Bill Ballas


    Earlier this week I attended an informative luncheon hosted by the AFP Silicon Valley Chapter.  It was so fascinating I felt compelled me to write this entry for my friends and clients in the corporate and not-for-profit sectors. 


    The featured speaker was Jacquelline Fuller, Google’s Managing Director of Global Giving (www.google.org).  Her presentation, “Why Google Gives,” was focused on sharing Google’s grant opportunities and hints for submitting a successful application.    


    Between taking notes, I was reminded of a study that showed for every $1 the average corporation gave to charity, it should see its profits grow by $2 to $3.  The research was published by Lev, Petrovist, Radhakrishnan (2007), and it analyzed the corporate donations of 251 major companies for 2005. 


    For details on this research project and their more recent work on the topic, copy and paste the following link in your web browser: http://blogs.law.harvard.edu/corpgov/2011/08/20/making-the-business-case-for-corporate-philanthropy/


    In the meantime, their other findings were:


    • The top 251 corporations donated $14b in cash and goods (44% of donations)

    • The top 251 corporations averaged donating 10 cents for every $100 of net sales revenue

    • The top 15 corporations donated $1.6b cash, and $4.5b in goods

    • For every $1 given to charity, the average company should expect profit to rise between $2 and $3

    • Most corporations do not take full advantage of corporate philanthropy as a business tool.


    It seems that when corporations properly promote their charitable activities, they attract new customers, strengthen consumer loyalty, improve staff retention, and build an esprit de corps among their employees.  This is quite a return on an investment of 1/10th of 1% on net sales revenue!


    Google seems like an exemplary corporate citizen – not just for the $100 million it donates annually – but also for the time and talent their 30,000 employees give to not-for-profits.  The aggregate value Google’s contribution to philanthropy is enormous.


    While some marketers argue that corporate philanthropy is wasteful or a “tax” levied on shareholders, others ask, “If a company doesn’t support the community in which its employees and customers live and work, why should consumers support the business?”  After all, corporate philanthropy is good business for everyone. 


    If you want more proof, do a google search on “corporate + giving + enhances + profits" and see other study results.

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  • Is Tim Cook Crazy Or Brilliant?

    by Bill Ballas


    by Bill Ballas


    If you made it this far, you’ve noticed several quotes on this website.  Each comment represents my view as to best marketing or fund development practices. In fact, Peter Drucker’s words that ". . . business has only two basic functions: marketing and innovation,” informed WSB’s positioning statement: “Innovate. Market. Repeat.” 

    My intent is to make this space useful to you, so I will also share the musings from thought leaders whose words provide insight and inspiration.  So, let’s begin.

    Have you noticed that major corporations such as Apple, Google, and PepsiCo are now planning their marketing strategy “from the inside out” just as not-for-profit organizations do?  The reason is these companies believe their mission gives them a powerful competitive advantage.  As Apple’s Tim Cook remarked last summer, “We do things because they are just and right. We are committed to advancing humanity.” 

    As Mr. Cook and leaders of not-for-profit organizations know, an “inside-out” strategy is idealistic, practical and strategic.

    So why do so many businesses have mission statements to the effect of, “Our mission is to build the world’s best widgets.”  (Note to readers: You know that is not a mission statement, right?)   

    And why do many not-for-profits have equally obtuse mission statements whose focus is on outputs rather than outcomes? 

    Whether an organization is for-profit or a charity, if their mission statements are fuzzy, then so are their brands.  

    I believe Cook’s statement is brilliant and strategic.  He is using Apple’s purpose (“advancing humanity”) to differentiate Apple and unlock societal value – something the world’s wealthiest company finds great worth in doing.   

    Over the years it has been my good fortune to work with corporate and not-for-profit clients to create an “inside out” mission statement through "Reimagining Exercises."   Each of them found the process valuable, and often in unexpected ways related to employee retention and morale.  

    Tell me what you think.  Do you believe Apple’s purpose will drive future profits for them?


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