Non-profit status questioned

A recent court ruling in Minnesota has sent shock waves through the non-profit world recently according to this New York Times article:

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.

If you recall (or not), the non-profit status of hospitals has been questioned in the past two (or so) years.  So this is definitely something to pay attention to.  The discussion continues.

As local and state governments endure tough budgetary environments calls for such measures may gain momentum.

Good excerpt:

“The nonprofit sector is being pressed to be more business-like and to find new ways to fill the gaps between what government will pay and what services cost, but then assessors want to treat us like businesses, which pay taxes,” said Jan Malcolm, chief executive of the Courage Center in Minneapolis and a former state health commissioner.

And this:

“We need to figure out what we mean by ‘purely public charity’ because, frankly, we can’t afford as a state to lose nonprofits providing these kinds of services,” said State Representative Paul Marquart, chairman of the property tax subcommittee. “But it isn’t going to be easy.”

Paul Levy provides a defense of the non-profit status here:

But, I think the actual question is more interesting and subtle: What do people hope to achieve by threatening to take away the tax-exempt status of current non-profits? If their goal is not actually to take away the tax exemption, then they are seeking to have these organizations do more of what they feel is appropriate in the way of public service.

An interesting discussion in the comments ensues.