Nonprofits' city donations to receive overdue review
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A few days after we learned the University of Pittsburgh had raised more than $2 billion in a capital campaign, it was jarring to be reminded that all the nonprofits in the city together kick in roughly $3 million a year in their annual "gifts'' to the city that hosts them.
You could say that one figure has little to do with the other. Big donors to universities tend to be quite specific on where their money should go. There was nonetheless a stark contrast between this prosperous university crowing about its newfound wealth and the city pathetically waving its tin cup to raise money for street paving, garbage pickup, cops and the like.
The city's current deal with the nonprofits is not much of a deal at all. Some 46 of them anonymously contribute whatever they like to something called the Pittsburgh Public Service Fund, in addition to other side agreements involving 10 to 20 nonprofits. But the public never finds out who gave what.
The state, at long last, has decided to kick the tires on this rickety economic model. Pittsburgh's budget overseers, handpicked by state leaders in Harrisburg, are ordering Mayor Luke Ravenstahl to form a task force on nonprofits and report back in eight months.
Mr. Ravenstahl offered public thanks, and privately he should have hit his knees and thanked the Almighty. This is the fiscal equivalent of asking him to come up with a Christmas list. That the ever-expanding engines of the regional economy -- the hospitals and universities -- don't pay property or payroll taxes is a longtime budgetary concern.
The public deserves to know which nonprofits give and how much, said Dana A. Yealy, chairman of the Intergovernmental Cooperation Authority board.
Mr. Yealy was appointed to the board a year ago by Republican state House leaders. He is a Latrobe native who worked in Dallas in the 1980s, so he knows that Texas has adapted to the modern commuter economy in ways Pennsylvania hasn't.
Dallas and other big Western cities spent most of the past century making residents of their commuters, whether they liked it or not. They annexed surrounding land until the cities' footprints stretched anywhere from 300 to 600 square miles.
We're not going to do that in Pittsburgh. The politics go the other way for this 56-square-mile city. Pittsburgh has less than a quarter of Allegheny County's population. The lion's share of jobs remain in the city, but the state's civic map and infrastructure encourage commuting.
So what can a city do when most of the 9-to-5 crowd lives elsewhere and so many employers are mostly free from taxes? In New England, the big universities make payments in lieu of taxes (PILOTs) that outdo all the Pittsburgh nonprofits combined.
Harvard and Yale give $10 million and $8 million a year, respectively, to their host cities. Sure, these are the richest schools in the country, but Brown and Boston University, with endowments that fall between Pitt's and Carnegie Mellon's, contribute $6.4 million and $5.7 million to their host cities. Two Boston hospitals also kick in $4.3 million between them.
Mr. Yealy, who lives in Marshall, says he has no preconceived outcome for this task force, but insists it must have some suburban members because "this is a regional issue.'' It's pretty clear PILOTs are necessary in the tightly packed cities of the Northeast where any taking of taxable land can hurt a city's budget.
PILOTs are no panacea. Even in Boston, where 33 nonprofits make payments totaling more than $19 million, that's less than 1 percent of the city's revenue. Mr. Yealy says this task force has to be about more than just "we need more money,'' and he hopes an intellectually honest analysis will lead to a cooperative agreement.
The nonprofit coalition is cooperating, Mr. Yealy said, but this analysis can be done with or without a nonprofit's help.
Every city in the state has some form of this untaxed "eds and meds'' malady. If Pittsburgh gets this right, Mr. Yealy said, "I would hope that the process and the outcome would be something that other cities want to emulate.''
First Published October 21, 2012 12:00 am