According to Green, the bill could generate several million in revenue from organizations that may be operating outside of the guidelines for tax-exempt nonprofit agencies.
“If organizations are doing everything right and paying taxes for any commercial activity that is not a part of their mission, they will be fine,” Green told PGN. “However, if they are not doing it correctly, this makes it easier for the Department of Revenue to collect from them.”
Although Green did not provide specific examples of organizations that were abusing their nonprofit status, he said the measure would help prevent future violations.
“Hopefully this will result in people thinking about whether or not they have commercial activity going on that is not part of their core mission and getting them to think about what that means in the tax effort going forward,” he said.
Green said LGBT and HIV/AIDS-oriented organizations, like all other nonprofits, would not be affected as long as they are adhering to the tax guidelines.
“This bill will apply to all nonprofits regardless of their missions. I am focused on all nonprofits,” he said.
ActionAIDS executive director Kevin Burns said the revenue his organization generates goes directly to its mission, which he said should be the standard at other city nonprofits.
“We rarely have a surplus, and if we do it is usually very small. We use that money as reserves to cover gaps in funding and to keep our doors open,” he said. “I believe most not-for-profits, who are fortunate to have a surplus in a given year, use their surplus revenue in a similar manner.”
Mazzoni Center executive director Nurit Shein agreed that nonprofit organizations should be paying taxes for non-relevant commercial activity.
“The sticky part would be after the for-profit part is paid, the surplus goes back to the non-profit organization. I think it will be difficult to piece out how this would be done, but for the profit part of the bill, people should pay taxes for any business,” she said.
Burns noted, however, that there could be other alternatives to addressing the issue than through the tax process.
“I am just not sure if imposing taxes is the correct way to handle the problem. In general, I would think that this kind of activity would put the organization at risk to lose their not-for-profit status. It would seem that enforcing existing regulations regarding this would solve the problem.”