Minnesota Nonprofit Leaders Win New Law on Property-Tax Exemptions

Minnesota nonprofit leaders have won the final leg of their campaign to clarify state law governing charitable property-tax exemptions in the wake of what they considered a damaging Minnesota Supreme Court decision.

Gov. Tim Pawlenty last month signed a bill setting out criteria for determining whether a group is an “institution of public charity,” thus qualifying for the tax exemption. The law enacts language that was worked out between the Minnesota Council of Nonprofits and state and county officials.

The nonprofit council fought for the legislation after the high court in December 2007 denied a property-tax exemption to a child-care center because it always charged full price for its services, offering no discounts or free care for people with limited incomes.

The new law says organizations generally must meet six criteria that have been laid down by the state supreme court to earn the property-tax break, including offering “a material number of people goods or services free or at reduced prices.” But a group that does not meet that test can also qualify if it offers services that “alleviate burdens or responsibilities that would otherwise be borne by the government.”

The language also allows groups to qualify for the exemption if they are supported by government grants. The supreme court had ruled that they must be supported completely or partly by donations or gifts, excluding organizations that relied mostly on government payments.

In addition, the law offers some flexibility for organizations that do not meet some of the six criteria if they can offer a “reasonable justification.”

“This is a huge success and a great relief to nonprofit property owners across the state,” said Christine Durand, a spokeswoman for the Minnesota Council of Nonprofits.

See The Chronicle’s coverage of the Minnesota Council of Nonprofit’s campaign following the supreme court’s ruling in Under the Rainbow Childhood Center vs. County of Goodhue.

Suzanne Perry

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