Raging Against the Cause: When Nonprofits Orgs Are Anything But
Last Christmas was Michelle Finholdt’s worst. Shortly before the 2007th anniversary of Christ’s birth, Minnesota’s Supreme Court ruled that Finholdt’s nonprofit agency was too much like a for-profit business, meaning that come April 15th, she would be expected to cough up $16,000 in property taxes for the first time since founding the Under the Rainbow Child Care Center in 1994. She probably prayed for a holiday miracle, but even St. Nick isn’t foolish enough to go flying around with that much cash on hand.
As the New York Times dutifully reported last week, nonprofits are becoming increasingly business-like across the country, and the questions are piling up like dorm room laundry. Are these agencies doing anything for the pubic good? For the ones who are not, should they really be given a considerable tax-exemption for doing so? And festering underneath the questions is growing pressure for some non-profits to start anteing up.
In two consecutive nights this past May I found myself at a pair of annual fundraisers hosted by nonprofits, one dedicated to family justice, the other to housing. Both causes were innocent enough, but the spacious SoHo office, the trendy Chelsea event center, the open bars, the caterers, the expensive suits, the models, the pricy gift bags and the unmistakable scent of cash made both agencies come off as more hypocritical than a god-fearing atheist. If these types of organizations want to contribute to the common good, so be it, but let’s stop bullshitting around. They are semi-businesses at best, certainly not pure charities, and I’m glad that at least one supremely wise court in Minnesota is beginning to make the distinction.
Most of the nation’s 1.6 million nonprofit organizations enjoy 501(c)3 certification, a rectangular piece paper allowing them to claim large tax exemptions each spring, something for which most American homeowners would likely sell the family pet, a nice heirloom, or perhaps a third or fourth-born child. In return, say the states, these same agencies are expected to perform utterly altruistic services in the name of public wellbeing.
Yet, as I witnessed first hand, the term “nonprofit” can be wildly deceiving, conveying an image of selflessness and goodwill, when in reality a whole host of largely undeserving organizations are blessed with the 501(c)3 holy water and then turning their backs on the priests.
Under the Rainbow could be the least nefarious example, a daycare that charges all families the same market-rate price regardless of their clients’ ability to pay. It may be not-for-profit, but what does it do for the public good that a for-profit daycare does not? Nothing. Certainly not $16,000 worth of good.
And on the other end of the rainbow are the large, private universities. Sure, their students occasionally volunteer in nearby communities, but the institutions themselves offer far less, preferring instead to ignore local residents and gobble up surrounding land like a bunch of Israeli settlers. Try explaining without sounding insane how Harvard, boasting an endowment bloated past the $30 billion mark and yearly returns of fifteen percent, is a “nonprofit” institution dedicated purely to public charity.
To the relief of Cambridge and Boston residents however, Massachusetts officials are tackling the issue by earnestly debating a bill that would levy a 2.5% tax on any university with endowments in excess of $1 billion, a sum deemed adequate for an organization supposedly devoid of profit. Should it move forward, the legislation will take nine separate ivory towers by the ankles, including Boston College, Boston University, MIT, Williams, and others, and shake them down for a fraction of the spare change they’ve been hoarding for years under the nonprofit moniker.
But in between the lowly daycares and the powerful universities are a slew of other non-profits where the line between pure charity and sinister deception isn’t so stark and the threat of government intervention far less severe.
Consider a private elementary school where New York’s richest pay $22,000 each year for me to teach their five-year-old kids. Or a mental-health advocacy agency that compensates its executives with six-figure salaries and throws wildly lavish parties each May. Are such organizations really deserving of their nonprofit status and a comfortable tax shelter when so obviously not in need? When does this perverse game end?
Indeed, not all non-profits are so questionable. Certainly groups like the NAACP and the ACLU contribute immensely to our collective wellbeing and ought to be rewarded for doing so. So too should the thousands of smaller organizations (ahem…Conscious Lifestyle) that sincerely struggle for the greater good.
As for the others, the essentially for-profit, sometimes ostentatiously so, businesses hiding under the fluffy 501(c)3 sheepskin? The Under the Rainbows and the Harvards? Well, if Minnesota and Massachusetts are any accurate barometer, soon they’ll all start dreading and loathing April 15th like the rest of us.
The following is a guest post written by Nick Fuller-Googins, a 25-year-old Brooklynite tasked with the well-being and edification of 17 six-year-olds in Manhattan. Nick will be hopping on the next train west. You can find all of his ramblings at his blog, thirteenam.