Open talks required for nonprofit contributions to city revenue problems

Pittsburgh is heading into a dark age.

Failed infrastructure projects, lack of tech sector growth, and mass transit cuts are just a few of the predicaments plaguing the city these days — not to mention that the population has been hemorrhaging constantly since about 1950.

Currently on the top of the list of grievances is a planned $3.2 million of protection money taken from nonprofit organizations to keep the city’s massively unsupported pension budget afloat for another year.

Why call it “protection money”? In the face of looming budget deadlines and starved-for-revenue sources, the Pittsburgh city government elected to ask a coalition of 46 nonprofits to cough up the money in lieu of being taxed — which has “mafia” written all over it.

There are a few major faults with this approach: Namely, why is the city considering taxing nonprofits in the first place? Instead of taking money from these institutions, the city should be attempting to grow and nurture its nonprofit base. With dozens of churches, universities, prominent hospitals, and other cultural institutions, the NPO sector is truly one of Pittsburgh’s major attractions.

At a time when the city council is trying desperately to keep graduates and young people within city bounds — even going so far as to form committees to meet that end — the council is attacking the same constructs that are potentially the only reasons left to stay in Pittsburgh at all.

Is this an act of hypocrisy, or just a lack of foresight? It’s hard to say. What is certain is that nonprofits provide a valuable and visible impact on the communities around them; in a weak economy in which graduates struggle to find jobs, nonprofits offer them jobs and positions to kick-start their careers.

This in turn could lead to more highly educated workers staying in the city, creating businesses of their own, and generating higher-salary jobs for other workers.

Admittedly, there are certain nonprofit organizations (NPOs) which can afford to cough up a few, especially considering that Pittsburgh’s corporate base is shriveling these days as fledgling businesses flee for the coasts.

UPMC, Carnegie Mellon, Pitt and Duquesne are prime examples of super-powered NPOs which remain relatively untaxed. Perhaps the solution is for the city to set a floor for its taxation plans; rather than taxing smaller groups, such as YMCAs, levy a tax only on large, robust organizations which earn gross revenues above a certain limit, such as UPMC. Overall, the ultimate solution should be clearer communication for everyone involved.

The Intergovernmental Cooperation Authority recently sent back the city’s proposal (including the nonprofit pledge amount) for further review; there has been no official discussion of a pledge total from the city’s nonprofits, and city officials have had only unofficial talks with those groups.

If we can get these issues out into the open and have a reasonable talk about contribution, perhaps the city’s nonprofit organizations can find a healthier and more reasonable way to give back.