Kate Davidson · Government to Nonprofits: Please Send Us a Check. Pretty Please?

June 17th, 2011


Last fall, nonprofit organizations in Mount Clemens, Michigan, got an unusual letter in the mail. It was polite – a little formal, actually.  It essentially said:

Dear Nonprofits,

Times are hard.  We know you don’t have to … but please send us money.

Sincerely,

The City of Mount Clemens 

(You can read the real letter here.)

If you’ve followed our reporting this week, you know the relationship usually is the other way around — often, nonprofits ask governments for money. This can happen when badly needed payments for government grants or contracts get delayed because of cash-flow issues at the federal, state, county or city level.

So what about the letter? Well, it’s all part of the same cash crunch.

Mount Clemens is a little city, of about 16,000 residents and just four square miles. It’s also the seat of Macomb County. But the county government doesn’t pay property taxes on its own buildings, so the city loses a part of its potential tax base. According to Mayor Barb Dempsey, tiny Mount Clemens is chock full of other tax-exempt landowners: hospitals, schools, charities and some two dozen churches. By law, many nonprofits don’t pay property taxes. But a broke city will look under every couch cushion. So in the face of a multimillion dollar budget deficit, Mount Clemens decided to ask for voluntary contributions.

The letter went out on November 17, 2010.

Seven months later, I called Mayor Dempsey to see if it worked.

“I would have to say it’s a success because we had zero,” she said. According to the mayor, the plea brought in $7,000. Donations arrived from three local churches, one library and the Macomb County Historical Society.

“I’m pleased,” she said. “I wasn’t expecting a million. You know, even for them to give us a thousand, two thousand, each is a sacrifice.”

Nonprofit umbrella groups hate these kind of payments, known as PILOTs (payments in lieu of taxes). They see them as a violation of the compact that exists between nonprofits and their government partners, a compact that helps social welfare groups and others provide needed services at lower costs.

So far Boston, Scranton, Pa., and St. Louis, Mo., are among the municipalities that have looked for payments from their nonprofit communities.

All told, it doesn’t look like this trend is taking off in the industrial Midwest.

Mount Clemens reduced its budget deficit to $600,000, which it borrowed from its reserve fund for next fiscal year. Dempsey says the city laid off workers, got concessions from the fire department and retirees, and stopped putting fluoride in the water.

She says she probably won’t send the letter again next year.

Category: Biztech, Communities, Government, Michigan, New Economy Nonprofits, Nonprofits
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