Tuesday, May 27, 2008

Holiday Reading

New York Times reporter Stephanie Strom published a page one piece on May 26th once again raising the issue of charities' tax-exempt status, leading with "Authorities from the local tax assessor to members of Congress are increasingly challenging the tax-exempt status of nonprofit institutions — ranging from small group homes to wealthy universities — questioning whether they deserve special treatment." Her story cites a Minnesota Supreme Court decision requiring a child care center to pay property taxes because they charge one price for all regardless of any subsidies they may receive from government.

The article underscores that with the economy in recession, state and local governments are trying to replace shrinking tax revenues any way they can. Making tax-exempt groups prove they are actually charities - i.e, they give away their services - may be as much as the Times could come up with on a lazy, sunny, long Memorial Day weekend. Not to be disrespectful to Ms. Strom but this dog barks in every recession. As she mentions private hospitals as well have cut way down on charity care yet remain tax exempt. What she doesn't write is that the grumbling has been going on for decades with no legislative result. (See Oram Matters April 4th blog below).

Her piece also gets to the Congress's interest in going after wealthy universities, who pound for pound are much wealthier than hospitals. They have alumni. Hospitals have those who left vertically or their sometimes grateful families when they go out toes up. But Congress going after wealth through legislation is markedly different from local tax authorities squeezing local nonprofits. Legislation to force reform is going nowhere in an election year and if history is a guide not any time else either.

Immense wealth is ever more concentrated in fewer and fewer hands. For example the worth of the 20 richest Americans, reported by Forbes was $436 billion last year. Efforts to redistribute that wealth is really not an agenda item for any breathing politician or government official. Nor will it ever be. No matter how they may game the system and there's some pretty inventive stuff out there - including complex gifts to charity - the taxes these folks paid in are enormous, assuming an effective 15% tax rate that's $65.4 billion.

The aggregate worth of the universities is much less. MSNBC reported that the 20 largest endowments were sitting on 134.4 billion dollars. If these schools' spend rate was 5% - which it isn't - $6.7 billion would be going into operations and the cost of sending your kid to one of these schools could go way down. In fact a few have made big cuts in their tuition to respond to the pressure but most are sailing merrily on.

Loathing the tax collector is an American pastime and an attack on wealth concentration is not in the cards.

Thursday, May 15, 2008

Cooper Union Tops Out!

An Oram client,The Cooper Union for the Advancement of Science and Art (www.cooper.edu) today celebrated the topping out of its new East Village academic building. Designed by West Coast architect Thom Mann this "green" and very innovative addition to New York's civic spaces has been made possible by generous private philanthropy, borrowing and modest government encouragement.

One of the most striking attributes of the building is - despite its cutting edge look - how easily it complements the original (and still functioning) Foundation building completed in the late 19th century. For a tour of the new building visit the Cooper Union web site.

Tuesday, May 6, 2008

Congratulations Class of 2008!

For 20 plus years I have been adjunct professor of philanthropic management at the Milano School for Management and Urban Policy at The New School University in New York. Next week my current group of 15 graduate students - having to my satisfaction completed case studies on existing or start up nonprofits - will graduate. We all began working together at the end of January this year and this required seminar is the only thing that stood between them and graduation.

Of course each year's class is unique and so was this one: 13 women, 2 men, one Thai one Canadian, 2 ex-Peace Corps women, one recovering lawyer, one Latino, one African American woman, one Floridian by way of Colombia and one Vietnamese-American and one Korean-American. The age range is from right out of college to early 40s. These people worked hard and with no little anxiety. They have been at this for three years in most cases and by now they just want to be done with it. Some are full time students, the others hold down jobs.

The subjects they explored included the Dominican Diaspora, the creation of an environmental social venture for profit/nonprofit, strategic and financial planning for under-resourced organizations, arts education in the schools, performance metrics and organizational structure and management. We learned from each other of course. But I learned more from them than they did from me.

As we know commencement exercises and blather go together. So I'll just limit myself to congratulations to each of you. Well done!