Nonprofits boosting Boston’s coffers
Contributions up substantially with new city formula
Boston nonprofits have boosted their voluntary contributions to city government over the past six months by 24 percent, advancing a longstanding goal of Mayor Thomas M. Menino, despite the misgivings of some institutions.
Since July, the city has received $9.4 million from tax-exempt institutions such as colleges, hospitals, and museums, a substantial increase over last year’s pace, according to the mayor’s office.
Boston University, for instance, has paid more than $2.6 million, while Harvard University has contributed more than $1 million. Northeastern University has paid $443,000 over the first half of the fiscal year, up from $30,000 for all of last year, according to figures provided by the city.
Partners HealthCare has donated $2.8 million so far, compared with $4.3 million last year.
Ron Rakow, the city’s commissioner of assessing, said he was pleased with the increase, particularly in the early stages of a new payment system put into place last year.
“We’re very encouraged,’’ Rakow said. “It’s an understanding of the fiscal impact these institutions have on the city.’’
Medical institutions are on pace to increase contributions by well over one-third. Beth Israel Deaconess Medical Center, for example, paid half of its $752,000 contribution, compared with $167,000 last year.
Kevin Tabb, president of Beth Israel, praised the new program as “fair, reliable, and transparent.’’
The city’s deep reservoir of nonprofits often do not pay property taxes, but make contributions to compensate the city for the cost of public safety and other municipal services. Their payments usually vary widely, and Menino has consistently called for heftier sums across the board.
Last year, city officials established new guidelines asking nonprofits to make payments based on property values.
The officials believe the program is the only one of its kind, and say it has drawn national attention for its potential to bolster strained municipal budgets.
The plan identifies 45 institutions that own property valued at more than $15 million. They have been asked to contribute $21.5 million this year, up from $15.2 million last year.
With the increased payments, the city received 88 percent of its requested contributions, which in many cases were substantially more than last year’s. Medical institutions have so far contributed $4.2 million, compared with $6 million all of last year. Colleges and universities have paid more than $5 million, compared with last year’s $8.8 million.
Under the new formula, nonprofits are encouraged to increase annual payments over the next five years until they reach 25 percent of what they would pay if they did not enjoy nonprofit status. That would generate an estimated $50 million in revenue, Rakow estimated.
More than half of the city’s land area is not taxed because it is owned or occupied by tax-exempt organizations, including the government.
Nonprofits are also asked to contribute services, such as scholarship programs or psychiatric services to public school students.
Richard Doherty, president of the Association of Independent Colleges and Universities in Massachusetts, said the increased payments reflected schools’ traditional willingness to support the city in a range of ways.
“The response you see today reflects the diversity of ways these institutions choose to contribute to the city,’’ he said.
He noted that local colleges pay substantial real estate taxes and are huge employers, contributing substantially to the city’s economy.
Nonprofit leaders have expressed some qualms about the new system, fearing it will become entrenched as an effective tax. Earlier this month, Museum of Fine Arts director Malcolm Rogers wrote an opinion column criticizing the move, titled “Don’t kill the goose.’’
“When civic leaders look to cultural organizations as a source of revenue, rather than as an invaluable resource for the communities they serve, it has dire implications nationwide,’’ he wrote.
Peter Schworm can be reached at firstname.lastname@example.org. Follow him on Twitter @globepete.