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Incoming! Nonprofits under fire on Smith Hill

March 30, 2012

A hearing yesterday at the House Finance Committee highlights growing public frustration over a perceived lack of financial support from tax-exempt, non-profit institutions.

Providence Mayor Angel Taveras has been leading the charge for hospitals and universities to pony up as the city faces a $22.5 million deficit.

Speaking at the statehouse yesterday, Representative John Carnevale noted Brown’s $2.5 billion endowment and Lifespan CEO George Vecchione’s $9 million paycheck in 2009, comparing the institutions’ tax-exempt status to an illusion of storybook proportions.

“When you hear these numbers, are these true non-profits? I say no,” Carnevale stated. “But the Wizard of Oz, they hide behind that 501-C-3, behind a curtain. They’ve taken lessons from David Copperfield and they’ve put together the grandest illusion of them all”

Providence officials say roughly 50 percent of land in the city cannot be taxed because it belongs either to the government or to large institutions like hospitals and universities. The city is backing a bill that would require large non-profits to pay roughly a quarter of the taxes they would pay if they were not exempt from property taxes.

University leaders say they already contribute millions to the city, both in the form of payments in lieu of taxes and in charitable projects in city schools and neighborhoods. They also argue that endowments are not funding sources they can draw on at will, and say their main focus has to be controlling tuition costs and providing financial aid for students.

So far, Johnson and Wales University is the only school that has agreed to increase annual payments to Providence.

Hospitals do not currently make any payments in lieu of taxes. Michael Souza from the Hospital Association of Rhode Island testified that the health care industry has its own financial challenges.

“Hospitals lost about 15 million dollars in the last fiscal year,” Souza told the finance committee. “They’re looking about 20 million dollars worth of reductions in the proposed state budget. Through healthcare reform, they’re going to get reduced by 25 million dollars.”

2 Comments leave one →
  1. Ed C permalink
    March 30, 2012 7:41 pm

    What about RI churches? Are they not considered nonprofits? Are they planning on contributing?

  2. March 31, 2012 11:24 am

    You’re right, churches are absolutely considered non-profits. So far the focus has been on hospitals and universities, perhaps because of the large amounts of money in their budgets and the comfortable salaries of many of their top employees.

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