Ferlo takes aim at nonprofit outsourcing
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A Pittsburgh state senator wants to prevent large, nonprofit institutions from outsourcing work to foreign countries -- and wants to strip them of their tax-exempt status if they should cross him.
Sen. Jim Ferlo, D-Highland Park, said he was preparing legislation to amend the Institutions of Purely Public Charity Act of 1997, the body of state law that defines eligibility standards for charitable institutions and nonprofit 501(c)3s.
Mr. Ferlo said he had health care giants Highmark Inc. and the University of Pittsburgh Medical Center in mind with his proposed amendment. On Saturday, the Post-Gazette reported that insurer Highmark was off-shoring some technology work to India as a cost-cutting measure.
"It's like a slap in the face back to the people who are paying the premiums," he said.
Mr. Ferlo said the nonprofit companies of today were far different creatures than the ones from four or five decades ago, many of them acting as tax-exempt umbrella organizations that reap revenues from a variety of for-profit subsidiaries.
"It does cause an eyebrow to be raised about whether they are truly and sincerely nonprofit," Mr. Ferlo said. One of the provisions in the act, as it's now written, says, "The institution must operate entirely free from private profit motive" to qualify as a charity.
While off-shoring is a troubling trend in the for-profit world, those issues are best addressed with federal legislation and international trade agreements, Mr. Ferlo said. The state Legislature, on the other hand, is within its jurisdiction in tinkering with the Purely Public Charity Act.
First Published August 18, 2010 12:00 am