In response to a proposal to cut funding from the federal budget, U.S. Rep. Doug Lamborn (R-Colorado) reportedly told the Herald. “We know that they can survive on their own. It’s time to push Big Bird out of the nest and let him fly on his own.”
I think the guy’s got a point. Big Bird can fly on his own if he can pay the CEO $425,000!
From the story:
Four vice presidents and producers pulled in more than $300,000 – and another 10 took home more than $200,000 – in pay and benefits;
145 of WGBH’s then-950 employees – about 15 percent – earned more than $100,000.
Ex-WGBH president Henry Becton Jr. – now the station’s vice-chairman – made $160,873 in total compensation for working just 24 hours a week.
Top brass pocketed more than $200,000 in bonuses.
Bonuses? Really?
I think revisiting the definition of a non-profit is long overdue. In this kind of economy, everything should be on the table. We’re watching budget cuts hurt the weakest of the weak in our society and yet, we allow these so-called non-profits are allowed to keep their non-profit, largely tax-exempt status, while paying out these very generous salaries and bonuses.
It’s time.
between earning income their skills demand and working for the common good?
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p>I’m not arguing that any individual’s salary is appropriate. I just wonder in general why we expect those who work for agencies which perform a public good should also suffer financially for doing so.
Salaries in the low- to mid-six figures for top brass at an operation that produces TV content of the quality and quantity that WGBH manages strike me as not unreasonable.
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p>However, not paying anything to the city for the services on which WGBH relies? That does strike me as unreasonable. Who do they expect to put out a fire, should (God forbid) one break out in that beautiful building?
Sorry for repetition, I was writing when you were already commenting.
I have no issue at all with the salaries. Frankly, I’m surprised by how low they are. The top people get paid well, but WGBH puts out great programming, on average much better than the networks, where execs will make much, much more. Also, I suspect that the salaries on the low-end of the scale are not very generous.
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p>Removing tax exempt status or capping salaries on non-profits could lead to lead to fewer non-profits, and especially fewer well-run non-profits, which I don’t think is a good thing.
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p>I don’t like the lack of the PILOT, though. If your organization can afford a very expensive building, a kickback to the city should be in order.
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p>I am angry about the types of cuts we make, but I don’t think that taxing successful non-profits would make much of a difference, and could hurt many, less successful non-profits. We could easily avoid most budget cuts if we were willing to budge on other sources of revenue. Taxing some non-profits wouldn’t get us anywhere close to where we need to be on revenue the way that tax changes on capital gains, very high-income earners, and large corporations would.
I’m just saying that if a non-profit can afford to pay for that kind of talent, and that kind of building – it can pay its taxes. Those services don’t come free – and everybody else if paying for them.
I think they should have a PILOT of some sort, but I don’t think regular taxes are needed, and I worry about what impacts assessing those taxes could have on the non-profit sector as a whole. Boston was asleep on this deal, for sure.
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p>From your comment below:
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p>Yes, everyone should contribute, but I think our focus should be on making sure that those most able to take a hit are taking a fair hit.
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Seriously, why not? It’s property. Everyone else’s property – for-profit businesses and individuals – is taxed. What’s so different about non-profits that says that their home shouldn’t be taxed, while the homes of Massachusetts residents trying to feed their families should?
Seriously. It’s all voluntary. So non-profits give generous PILOT payments when they’re doing well, which is usually the same time the government has no or little trouble raising revenues.
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p>Then the economy goes bad, their donations dry up, and suddenly they can’t afford to make PILOT payments-at the same time the government desperately needs that revenue. So property taxes are definitely a better answer. Maybe at a lower rate to take into account the fact that they may be providing some services, such as education, instead of using them.
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p>The solution for smaller nonprofits is to exempt a certain value of property before taxes kick in.
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p>Taxing nonprofit revenues would give them MORE incentive to pay out large salaries, not less. For a for-profit business, salaries are a tax-deductible business expense. So if the company is taxed at 35%, that $200,000 salary really only costs $130,000 +FICA. But for a nonprofit, there’s no tax benefit. That $200,000 salary costs $200,000+FICA.
We don’t tax their property because it allows non-profits to more easily provide useful services. Taxing their real property, or other types of their property would limit that ability. And specifically in regard to real property, having no property tax gives them incentives to expand. WGBH probably wouldn’t have built an $85 Million, interesting building if they had to pay the full tax burden.
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p>If the universities had to pay property tax, they would be paying hundreds of millions to Boston and Cambridge every year. That would be nice, but it would also likely change their incentives. University expansion, although it can be annoying, does create a lot of jobs and has a variety of multiplier effects.
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p>Non-profits also seem much more likely to build attractive buildings than private interests (and I’m sure the tax considerations weigh heavily in those decisions), which help make cities more livable, attract tourists, increase other property values, etc.
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p>Also, and I would not be heartbroken about this, the religious organizations in the area would be toast. The Archdiocese would have to pay a pretty penny each year for that South End cathedral. And how would you assess the values fairly? What would Trinity Church be worth?
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p>Is that not precisely the race-to-the-bottom argument that comes up every time someone proposes giving a for-profit business a tax break that they claim to need so that they can create more jobs? It seems to me obviously true that if a business doesn’t have to pay taxes, it has more money around, which it can invest in new jobs, or expanding its facilities, or other economically beneficial activity. Seems to me we should scrutinize this argument just as carefully in the non-profit as in the for-profit sector.
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p>Same response.
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p>Same response. See also my comment regarding Harvard and Allston in the related thread.
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p>There, I just have to flat-out disagree. Some buildings built by for-profits are architectural masterpieces; some by non-profits are monstrosities. I really don’t see why a business’s for- or non-profit status should affect its taste in architecture.
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p>Not toast. Just having to find a way to meet their community obligations, like everyone else.
I think the argument may be similar, but there is a big underlying difference. For the most part, the services non-profits provide are ones that we value but believe that for-profit organizations would not be able to provide to the same degree, and therefore need the help that tax exemption supplies. It comes down to how much we value the work of one set of groups compared to another. Basically, these tax exemptions incentivize non-profits to provide services for the public good, but tax breaks for businesses incentivize making more money (with public benefits only incident to that goal).
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p>I don’t want to be misunderstood. I think many non-profits can and should pay more (including WGBH) but I think that taxing non-profits at rates even close to normal residential or commercial rates would be bad because it could reduce the services offered. Maybe that could be done through a special, lower tax, or just through better negotiated PILOTs.
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p>Harvard in Allston:
Harvard’s expansion in Allston is a failure, no one questions that. If they had completed that construction, I think residents in Allston would think very differently. That disastrous hole in Allston is more the exception and not the rule we’ve seen from university expansion in this area. Expanding to Allston probably would have been a lot less likely if Harvard had a few hundred million dollars less to spend each year (assuming the same levels of fundraising) because of taxes.
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p>Architecture:
Of course there are some non-profit monstrosities and some for-profit gems, but I think for the most we have more architectual gems owned by non-profits. Many non-profits (especially museums, schools, churches, and other service providers) have incentives to build more attractive buildings than businesses do, and having additional funds to spend helps. It’s not a question of taste, it’s a question of incentives, and for-profits have fewer incentives to build beautiful buildings than many non-profits do. If you are serving the public, you are going to have buildings oriented toward public use, which often results in nicer buildings. Same reason why city and state buildings are often more attractive (usually in a direct relation to their purpose). In the Boston area, I can’t think of too many beautiful, non-resident private buildings that stand out among the best buildings in the area.
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p>Religious orgs:
I think many religious organizations, especially the Catholic Church, would be decimated in this area. The Archdiocese is having a hard time just paying the upkeep on many area churches. Paying the normal tax rate on those large buildings would make things much more difficult. Maybe they could survive with also paying taxes, but they’re barely getting by now.
But it occurs to me there’s another way to help negotiate better PILOT agreements: better PR efforts by mayors and town managers.
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p>If a nonprofit reaches a particularly good deal with the city/town, make sure the public is made aware that this organization is actually concerned with promoting the public good.
If it’s stingy, make sure the public is made aware of that too.
Good PR efforts by municipal leadership may affect donations more than the amount of the difference in PILOT funds, making it a lot easier to get more.
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p>Certain nonprofits promote the public good. But an “educational” organization that’s really a front group for a political organization’s dark money spending is a lot different than the local soup kitchen, and this really needs to be taken into account.
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p>What services does WGBH provide to Boston that it doesn’t provide to, say, Cambridge? Might Boston residents be better off if WGBH was in Cambridge, with an extra $1.2 million in city coffers from a for-profit owner of such a building?
Everything should be on the table. We’re cutting services to the disabled, to the needy – heating oil for the poor. People keep saying there should be “no sacred cows.” Well – if everybody else has to take a hit, so do these non-profits. An 85 million dollar building and no PILOT? Yeah. This is nuts.