The Transparency of Nonprofits
This stepped-up activity in public value communications takes place against a backdrop of escalating challenges to cultural institutions and other nonprofits. While some orchestras may not have specifically encountered threats of new taxes or reduced government grants, the
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potential for those, coupled with continuing scrutiny of the charitable deduction, is not going away. David L. Thompson, vice president of public policy at the National Council of Nonprofits, follows the national news in this area; there is so much of it that his newsletter, Nonprofit Advocacy Matters, has a regular column titled “Tax-
es, Fees and PILOTs” (Payments In Lieu Of Taxes). The July 1 issue detailed preliminary activity in two state legislatures, Maine and Massachusetts, that could lead to the heightened imposition of PILOTs. “In return for tax exemption, nonprofits give up profits, privacy, partisan politics,” Thompson says. “We are the most transparent segment of the U.S. economy, and we can’t run candidates against the mayor or legislators. So, of course state and local governments are picking on us! But we can and must fight back.” Tax-reform efforts at the federal level have been taking aim at the charitable deduction since 2009, and this year’s process is no different. At the end of June, the Chronicle of Philanthropy reported, “The two senators leading the process of crafting legislation to overhaul the tax code announced Thursday that they are starting a ‘blank slate’ that strips out all deductions, exclusions, and credits and are giving their colleagues a month to make their cases for why such tax breaks—including for charitable donations—should be maintained.” Private funders also have increased expectations for the demonstration of public value. Karen Gahl-Mills, executive director of Cuyahoga Arts & Culture in Ohio, has spoken twice at the League’s National Conference on this issue; this year’s session, she notes, was overflowing with attendees. “Our organization is a public funder for arts and culture around Cleveland,” she says. “We use tax dollars, and public dollars require demonstration of public value.” Her organization is not alone. “We are coming to find, in conversations with other funders, that this has become more prevalent in all kinds of circles. They are not as interested in legacy funding as before. They want to know the impact on the public at large.” Gahl-Mills, who was an orchestra manager herself (she came to CAC from top positions at the Syracuse Symphony Orchestra and the Westchester Philharmonic, and took part in the League’s Executive Leadership Program), recognizes how challenging this new worldview is. “All of our legacy institutions, including symphony
fall 2013