Spending Other Peoples' Money ... Compassionately

At some point in history, a creative non-profit thought it wise to solicit Vermont towns for donations directly from the town budget, thus bypassing the individual charities that non-profits typically rely on to exist.  Since that fateful day, we have watched countless towns disperse tens of thousands -- and even hundreds of thousands -- of dollars to non-profits.   Unsurprisingly, these are often the pet projects of some board member.  Even when voted on by Australian ballot, these appropriations are rarely defeated, simply because voters struggle to make the distinction that voting in favor will have a direct impact on their tax rate.
    Do we have any chance of combating this problem? According to this Bennington Banner article, the prospects aren’t looking so good.
   

Non-profits can serve an important role in our communities, but Vermont  has a disproportionate share of them and all too often, they serve overlapping purposes.  Rather than consolidating and becoming efficient for the “common good” they compete and expand, hiring full time staff members and creating additional overhead. Less and less of each dollar donated goes to the cause, and the demand for additional dollars increases as the organizations struggle to meet overhead.  The tax-exempt status of these organizations is never questioned and they cause a property tax cost- shift to businesses and residents.   
    Worse still, Vermont does virtually no enforcement of tax filing requirements for these non-profit entities. We are giving tax dollars away, yet we require very little in the way of disclosure from the entity asking for funding.  We don’t require annual reports or compliance with tax law. Most towns (Shaftsbury for example) don't even ask the non-profit to come in to town meeting and explain what the money it is requesting will be used for. As long as we remain complacent about these issues we will continue to face high tax rates.

Comments

[Karen Kerin]

It goes far beyond the non profit groups that do indeed gobble up a lot of tax money for often competing for the same issue. I have asked at least one legislator to compile a bill asking for a listing of all the grants that the legislature has authorized and how much the total cost might be for those grants. Many of the grants are administered by boards that have special interests that leads to funds going to pet projects instead of to ones that are really deserving.
Since we are in a period of austerity, it would seem prudent for the legislature to examine its largess of the public purse and at least put the determination of disbursements up for public ratification.

[Edward Charles Ponzi Jr]

The biggest subsidy I am paying right now -- is debasement of my currency to bail out banks and Wall St.

But hey -- what's a few trillion in loans -- way below the rate of inflation -- and way below the rate that I borrow at -- when I can gripe about my village giving a few grand to a NFP?

Maybe at your next town meeting you can pass the hat to help sort out the $20 TRILLION dollar credit default swap -- bond insure mess.

After all didn't we all make billions in fees? Only fair that we pay now!

...the point you make is not wrong -- just absurd.

[Edward Charles Ponzi Jr]

Oh wait -- I almost forget -- been so busy trading and Fed watching this week.

Speaking of spending "other peoples money" what is the current tab to protect me from "terrorists" and operate 2 resource wars? The better part of a trillion to be sure.

At least all that is going well -- and we certainly have lots of "disclosure" about how this money is spent with our various contractors.

[Jon Harrison]

I don't think there's any question that federal boondoggles dwarf local ones. But that's not what Mr. Gardner chose to discuss in his post. He raises an issue that is often overlooked, but one that has a real impact on the overburdened Vermont taxpayer.

Funding nonprofits should be taken off the political agenda, period. Shouldn't even be something towns need to consider. Individual citizens are free to contribute to nonprofits, anytime. There's no reason property owners should be doing so as part of their local budget process.

[Edward Charles Ponzi Jr]

"Funding nonprofits should be taken off the political agenda, period"

What if a drop in NFP funding creates increased cots for the local entity that provides some social services? As there is some overlap -- NFPs failing to raise funds could leave some problems at the doorstep of the taxpayer in other ways unless you advocate zero social services -- in which case we might need more prisons.

"I don't think there's any question that federal boondoggles dwarf local ones. But that's not what Mr. Gardner chose to discuss in his post"

YES BUT -- frequently people who are grousing about some local welfare-state-ism seem to have these HUGE blind spots of about DOD, FED and other black holes beyond infinity.

[Jon Harrison]

I simply meant that he was focusing on the local scene. Talking about excessive federal expenditures is a big enough subject for a separate post, I'd say. Perhaps Mr. Gardner is wise enough to know that an intelligent discussion of that subject would require a lot of time and space. Possibly he had other things to do.

Social spending by government should exclude taxpayer handouts to nonprofits. If that happens to cause a shortfall in dollars, then the taxpayers decide whether they want to spend more or not. That's how government is supposed to work.

I definitely do NOT advocate zero social services. But it should be up to the taxpayers to decide what the levels of spending will be.

[Michael Gardner]

I think I saw Mr. Ponzi's SUV today with a "Think Global, Act Local" bumper sticker. Let's focus on the things we are able to change and work towards the challenges of a better tomorrow one step at a time.

[Jack Harding]

Mr. Ponzi,

The only thing "absurd" is your sense of superiority admiring large problems as others are proposing real solutions to relevant, local ones.

There is plenty of space on Vermont Tiger to comment on global issues. I am confident your views are welcome. I certainly enjoy them. However, discrediting proposals of small solutions to small problems in a small state neither enhances your credibility nor offers a solution for those problems you prefer to discuss.

We like small. That's why we live here and it's why this blog exists; it can mske a difference.

Please apply this standard...making a difference... to your comments as you are glorifying your views and belittling those of others.

[Edward Charles Ponzi Jr]

"Please apply this standard...making a difference... to your comments as you are glorifying your views and belittling those of others"

My apologies -- not my intention -- firstly I was questioning whether cutting NFP income from village-town sources won't simply come back as different/later expenses to municipal entities. I would suspect some of these NFPs can do many jobs cheaper than a governmental equiv.

Secondly -- this being a national election year -- I hope we all pay attention to the big issues that may be tougher and not get completely lost in the more manageable aspects of our lives.

Thirdly I am guilty of holding a generalization about people I meet who complain about some of the things our town-village pays for -- which is simply that they don't seem to mind the bottomless pit stuff -- it's the little things that irk them -- and I guess that irks me -- sorry!

[Mark Stahelski]

I'm a MA CPA working for a Vermont CPA firm. In Massachusetts, a non-profit has to file a Form PC with the Massachusetts Attorney General office, also providing a copy of the Federal 990/990-EZ. And, if the gross support revenues are high enough, they need either reviewed or audited financial statements provided by a CPA firm.