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Philadelphia Sees Drop in Fees Paid by Big Charities

March 5, 2010, 7:00 am

Philadelphia’s “payment in lieu of taxes” effort to raise money from large nonprofit organizations to cover the cost of municipal services is collecting a fraction of the amount intended when it was established 15 years ago, the Philadelphia Daily News reports.

In 1995 then-Mayor Ed Rendell (now Pennsylvania’s governor) signed agreements with 46 organizations to make the payments, which collectively were expected to provide a total of $9.4-million a year. Last year the city collected just $686,922, with major institutions like the University of Pennsylvania, Temple University, and Children’s Hospital among those paying nothing.

The city blames the decline on a 1997 state law intended to clarify what groups had to do to qualify for tax-exempt status. Previously court rulings had narrowly defined what constitutes a nonprofit group, making it easier for the city to sue to challenge such status, thus giving it leverage in negotiations on the service fees.

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