Illinois and the amazing disappearing property tax exemption

When Harold Pollack wrote about the recent Illinois Department of Revenue decision to withdraw property tax exemptions from three hospitals, he naturally focused on the impact of the decision on health care.  But those of us who work in other areas of the nonprofit sector are worried by the decision as well–or, if we aren’t, we ought to be.

Though the Revenue Department’s ruling and the Supreme Court decision on which it was based both concern hospitals, there are now working their way through the Illinois court system a pair of cases challenging the property tax exemptions of luxury retirement communities.  The plaintiffs are taxing districts which would otherwise be collecting big bucks from the communities, one of which is located on prime Chicago Gold Coast real estate–just around the corner, as it happens, from Northwestern’s Prentice Women’s Hospital, which will now (barring court intervention) have to pay property taxes on its equally valuable swath of land.  Lower courts have already ruled both retirement facilities unworthy of property tax exemption, and lawyers involved in both cases expect victory in the face of appeal based on the precedent of the hospital cases.

So what’s really going on here?  Certainly withdrawing tax exemptions from wealthy organizations sitting on expensive land makes sense from the standpoint of municipal budgets, which here as elsewhere are stretched beyond breaking.  So the Illinois Department of Revenue is following Willie Sutton’s [apocryphal] advice to go where the money is.

But what the Illinois Supreme Court has now said is that there are only three categories of tax-exempt real property under the Illinois Constitution: schools, churches and “charities.”  Further, the Court said, a “charity” is not simply any nonprofit organization, or even any nonprofit organization entitled to 501(c)(3) status and tax-deductible donations under the Internal Revenue Code.  A “charity” for Illinois property tax purposes is an agency that gives things away.  How many things?  Worth how much?  This remains unclear: perhaps a “charity,” like “pornography,” is simply something a court knows when it sees it.

And if the question is, “Are you a charity?” will the YMCA of Metropolitan Chicago be able to pass muster?  Will the Museum of Contemporary Art?  Will the Lookingglass Theater?  All three are located within spitting distance of the now-taxable hospital and retirement home.  So they’re likely targets for the next round of investigations.  What do they give away?  Worth how much?

(Just to confuse things even further: the Illinois constitutional standard is that only church property used for religious purposes is exempt; supplementary holdings are not.  I’m not aware of a parallel ruling about schools, but would expect the same standard to apply.  So if a charity owns property not used for charitable purposes–like, oh, vacant property the YMCA may someday use as a camp–will that be taxable?  If so, then it’s not even enough to be a charity–you have to be doing charity.)

As a consultant to charities, I’m supposed to be jumping up and down and screaming about this terrible precedent; but actually I’m not.  It’s long past time for us to ask the question whether arts organizations are genuinely charities.  (I’d ask the same question about well-endowed educational institutions and churches, but the Illinois Constitution prevents me from getting any reward for doing so.)  My only concern is how unaware nonprofit executives and Board members seem to be of the implications of these decisions.  Asked about her agency’s risk of having its property taxed, one executive dismissed the issue: “We’re a nonprofit–everything we do is charitable.”

Well, no.

This argument is playing out around the country.  What’s unique about Illinois is that the discussion is taking place in the courts rather than the legislature or the city council.  This interferes with any effort by nonprofits to rouse public opinion–or even themselves–in defense of their privileges.  Instead, the property tax exemption is going the way of the Cheshire Cat, bit by bit until there’s nothing left but the smile.

Let the Illinois nonprofit beware.

On Wisconsin!

On Tuesday I’ll drive from Chicago up to Sauk City, Wisconsin, to do voter protection, that is, pollwatching while holding a law degree.  Wisconsin historically has offered exceptionally inclusive voter access, including in-precinct same-day registration.  But one of the many delightful consequences of the Republican takeover of the state is a photo-i.d. law which isn’t supposed to take effect til the first of the year but is unclear enough to make for messy election days–precisely what the sponsors intended.  So I’ll go up there and do what I can to make sure everybody can vote, and hope that the selfsame “everybody” will throw the anti-collective-bargaining rascals out.

(Last weekend at the Bughouse Square debates–the Newberry Library’s annual effort to restore the fine art of soapbox speaking–the central topic was public-sector collective bargaining.   The young man speaking in opposition wore a Solidarity t-shirt as he argued that “public employee collective bargaining inserts needless conflict between citizen and citizen.”  Does he realize that Solidarity was a public-sector union?)

I’m going to Wisconsin because it’s a political situation about which I can do something–contra the whole debt-ceiling mess, about which I can do absolutely nothing.  I disagree with my colleagues on the left who think the President got backed into a corner on the debt ceiling because he’s weak.  He got backed into a corner because he’s actually trying to govern and the people he’s dealing with are not.

When the President was awarded the Nobel Peace Prize, skeptics wondered what he could possibly have done to deserve it.  It seemed pretty straightforward to me: his election meant the restoration of constitutional government in the world’s only superpower.  What could be more essential to peace?

Unfortunately, the Constitution had been damaged more than most of us realized, and merely electing a President didn’t guarantee its restoration–not when anti-government idealogues control the legislature and the judiciary.   All the finger-pointing on the left ignores the extent to which the right is engaging in the deliberate destruction of our governmental system.

The idea that people who hate government are controlling ours is actually more frightening than the notion that the President somehow betrayed us by averting a default.  The scary thing is, he did as much as he could.

Everything old is new again; and nonprofits should stay that way

A couple of weeks ago, I received a press release about the new Palindrome Advisors group with the subject line, “Redefining the Nonprofit Model.” Doubtless you’re all familiar with the genre: A group of business people get together and decide that the nonprofit sector hasn’t cured cancer or ended poverty because people in the nonprofit sector are stupid and lazy, and that an infusion of good old hard-headed American for-profit business practices will compensate for that.  Voilà: instant Great Society!

This particular redefinition is truly revolutionary:

One hundred advisers, including many of Silicon Valley’s elite, are coming together to disrupt the nonprofit space….[They] have committed to one full year of serving on the board of a nonprofit….[and] attending monthly salons where they will discuss the specific pain points of their assigned nonprofits and attempt to find solutions as a team….[This] is part of a larger movement . . . to make the nonprofit world more efficient….[Founder Zaw Thet states,] “This is just the start of how [we] will disrupt the nonprofit sector and create new, innovative ways for business leaders to contribute….Before [this], there was no easy path for nonprofits to find experienced leaders to help them at a board management level. A board role is not just about fundraising, but includes developing growth plans, operational efficiency, cause marketing, customer relationship management, event planning, and much more.”…In order to maximize results, [the group] carefully matches advisors to nonprofits based on their skills, interests and a nonprofit’s needs.

So let’s review:  A bunch of business people are going to sit on nonprofit boards of directors! And then periodically those business people will get together and talk about how to be better board members! As board members, they will not only fundraise, but also contribute their skills! They’ll join boards based on their interest in the nonprofit’s mission! And they’ll seek ways to improve the whole sector!

The accumulation of these radical notions caused me to swoon, but the one idea that really had me down for the count was that the entire purpose of the endeavor was to “disrupt the nonprofit space.” Do nonprofits that are trying to serve their clients really need disruption in their management to supplement the disruption of funding they constantly face, the disruption of their staff produced by those funding crises, and the disruption of their ability to operate smoothly or to secure resources when their message is being drowned out by a constant drumbeat of demands for “reinvention”?

As I fanned myself back to consciousness, I was struck once more.   This time the weapon was yet another article about hybrid corporate forms designed to enable nonprofits to earn their own revenue and stop “begging.”  Whether the discussion purports to be about Low Profit Limited Liability Corporations (L3Cs) or public benefit corporations or triple bottom lines, the argument is always the same:  Nonprofits should just get with the capitalist program, identify lucrative markets, and earn their keep like every other good red-blooded American.

This approach ignores the fact that nonprofit markets usually consist of clients who are not profitable to serve—because if they were profitable to serve, the for-profit sector would be serving them.  The better a nonprofit is at finding and serving its market, the poorer it will be, because though for-profit clients are a profit center, nonprofit clients are a cost center.

These two news items have one thing in common:  They ignore the fact that what nonprofits need isn’t more advice, it’s more money. When business people are ready to provide that—when they’re ready to serve on boards, not as agents of disruption but as securers of resources, and when they’re ready to advocate for a tax system that will underwrite the necessary work done by the voluntary sector—well, that will be news.

Emanuel and the Foundations: What price access?

In fundraising there’s an old saw that if you want someone’s money, you ask for his advice.  Leave it to the ever-innovative Rahm Emanuel to turn this observation into an ultimatum, telling people equipped with useful advice that it won’t be heard unless it comes wrapped in money.

That, in effect, is the meaning of Mayor-elect Emanuel’s request to a group of Chicago foundations that they pay the costs of his transition, costs  traditionally covered by leftover campaign funds, of which Emanuel has plenty.   In a city whose political culture has long consisted of being punished for disagreeing with or disobeying the mayor, the foundations faced an unattractive choice: call the mayor-elect on his inappropriate pick-pocketing and look forward to 40 years in the desert, or pay the man the $2 (or $200,000, as the case may be) in order to be heard. Continue reading “Emanuel and the Foundations: What price access?”

“Speak Softly and Carry a Big Stick”: The Coach and the President Heed an African Proverb

African-American leaders know better than to frighten their followers. Shouldn’t the rest of us know better than to berate them for their self-restraint?

The people who’ve spent the past several seasons calling for the head of Coach Lovie Smith on the grounds that he’s “ignorant and weak” and “emotionless” (among many less printable adjectives) are nowhere to be found since he led the Chicago Bears to the NFL Conference championships. Having failed to bury Smith, they absolutely refuse to praise him.

Why?   Because Coach Smith is a soft-spoken professional who leads not by shrieking but by—well, leading.   Chicagoans, particularly Chicago sports fans, can’t seem to wrap their heads around the notion that this gentle man— this gentleman—could possibly be any good at coaching football. That’s because the mold for Da Coach was set by Mike Ditka, a screaming, foul-mouthed, temper-losing maniac whose heart attack only narrowly missed taking place on the field.   If you’re not yelling like that, you must not be leading.

But if Coach Smith behaved like that—berating his players and abusing the press in rants liberally sprinkled with profanity—we’d hear nothing but tut-tuts about what an angry black man he was.  Probably neither the fans nor the team itself would be willing to follow him.  It’s no accident that the most successful African-American coaches — Tony Dungee, Mike Singletary, Lovie Smith — are all matter-of-fact and free of braggadocio.   That’s the way black men have to negotiate the world to avoid waking the not-very-soundly sleeping dogs of white racism.

Which brings us to the case of President Obama.   Everyone who derides him for not being tough enough—for not being Franklin Roosevelt or Lyndon Johnson—seems to forget that they’re speaking of someone whose life has required constant attention to the problem of being non-threatening.   That’s quite a challenge for a man who’s tall, brilliant and black.

But the President has succeeded at it through a combination of self-deprecation (“a skinny kid with a funny name”) and unshakable composure (“No-Drama Obama”).   If instead he’d emulated FDR in saying of his opponents “I welcome their hatred,” Fox News would have announced that he hated all white people. (Oh, right, someone on that network did that anyway.)   If like LBJ he’d insisted a reporter accompany him while he used the toilet, he wouldn’t be considered a lively and original character but just some ghetto type who didn’t know how to behave.

Consider the reportage when the president held a news conference explaining his decision to make the tax-cut compromise.  Having answered a series of questions designed to get him to say that he’d betrayed his promises, his party and his people, he was finally irate enough to respond, “It’s the health care battle all over again. Some people would rather rest in their purity than get something done,” or words to that effect.   As a rebuke goes, his was a pretty mild one.   But it was sufficient to produce several weeks of headlines about how the President had “scolded” his party and how “angry” he was.   If he’d actually been angry, we’d probably have seen articles of impeachment.

So all the people who want to give the President—and the Coach, for that matter—lessons in leadership should bear in mind that both men have learned precisely how much force they can use before that force is turned against them.   And they haven’t learned it from the Op-Ed pages or the screaming-heads fests.   Experience keeps a hard school but we will learn at no other.

I myself wrote—but fortunately did not post—the following incredibly misguided advice:

I understand the President’s unwillingness to assume the role of Angry Black Man into which his opponents wish to thrust him. But when the people on the other side of the table are card-carrying members of the Paranoid Style in American Politics, it’s time to stand up and call them the proto-fascists they are.   And hoping they’ll be willing to compromise seems a deliberate act of denial, like whistling past the graveyard. Instead, Barack Obama should emulate Harry Truman.   Give ’em hell, Barry!

WRONG!   As the Tucson shootings demonstrate, the last thing we need right now is public officials giving each other high-decibel hell.   And even if hell were called for, a black man in power couldn’t be the one to deliver it.   That’s an indulgence reserved for powerful white men—and every powerful black man knows it. It’s time the rest of us learned the same lesson.

The volume of reproach and disappointment and disapproval and correction directed at Coach Smith and the President says nothing about their leadership ability.   It’s purely a reflection of the fears and fantasies a significant subgroup of American white people have about American black people.   The fact that one of them produced a championship team, and the other achieved the health-care reform none of his white predecessors could manage (among many other victories), demonstrates that they’re far better leaders than anyone less challenged could dream of being.

So let’s stop giving them hell.

Health care reform politics and Kristallnacht 2010

There was a joke that used to go around about a golf game involving entertainer Sammy Davis, Jr.  Another player asked his handicap, and Davis replied “I’m a Jewish black man with one eye; how much more handicap do I need?”
This came to mind when I read the New York Times story about President Obama’s White House Seder.  It was surprisingly moving for a non-observant Jew to learn of the President’s observance of one of our rituals.  But as a Jew, I’m also slightly–and less surprisingly–alarmed on the President’s behalf.  People already accuse him of being a Muslim non-citizen; how much more handicap does he need?

It’s illuminating, though, to consider the President an honorary or metaphorical Jew, because it highlights the parallels between the hysteria attaching to Obama’s presidency and the hysteria recurrently directed at Jews.  What’s the difference between Sarah Palin’s claim that the President will operate death panels to kill her disabled child, and the classic blood libel that Jews kill Christian babies and use their blood to make matzoh?  Only the most ignorant and fearful among us could possibly believe such nonsense, and yet time and again scapegoating has worked because people have believed it and sought to eliminate imaginary threats by killing real people.

And now the President’s opponents have adopted another tactic from the anti-Semites’ playbook.  There’s already been way too much talk about Nazis in the course of debating the Affordable Care Act. But when a political group’s response to legislation comes in the form of coordinated window-smashing, only the willfully forgetful can fail to think “Kristallnacht.”

That’s the night the Nazis expressed their disappointment at a political setback by going on a simultaneous rampage all over Germany: killing Jews, beating them, setting fire to their homes and, most memorably, breaking 7500 windows of Jewish-owned shops.  The current incidents of vandalism against the offices of Congresspeople who voted for the Affordable Care Act aren’t remotely comparable in scale to that night in 1938, but they’re precisely comparable in purpose.   And the sound of breaking glass is the last thing you hear before reasoned political debate is drowned out entirely, and with it genuine self-government.

House Republican Whip Eric Cantor is apparently among the willfully forgetful.  His response to the outbreak of violence among those who share his political positions was to claim that he, too, had been the target of political violence and–more important–to blame the Democrats for making public what had occurred. In other words, he claimed victimization while blaming the actual victims.

Consider, if you would, the Wikipedia account of Kristallnacht’s aftermath:

More than 30,000 Jewish men were arrested and taken to concentration camps . . . . After this, the Jewish community was fined 1 billion reichsmarks.

In other words, the Nazis claimed victimization while blaming the actual victims.

Let me be clear: I don’t think the people who broke campaign-office windows are actual Nazis, or that their doing so had anything to do with anti-Semitism or Jews.  The fact that Kristallnacht was organized and the latest nonsense mostly not is a big difference, as is the fact that Kristallnacht had official sanction while the window-breaking doesn’t. Everything that happens isn’t about Nazis or Jews.

Being Jewish nonetheless provides a useful set of historical sense memories, and the sound of glass splintering on sidewalks is one of them.

In the early 1930s, plenty of people on the respectable German right disdained the low-class National Socialists.  They were a tool, that’s all, useful temporarily for cowing and marginalizing liberalism so the respectable right could regain political power.  By the time the respectable German right figured out that the Nazi tiger couldn’t be ridden, the whole country was already inside.

So who on the respectable American right will be the first to condemn wholeheartedly our current eruption of far-right thuggery? Apparently it won’t be John Boehner, who undercut his own criticism of the attacks by describing them as the natural result of insupportable Democratic provocation.   It won’t be Sarah Palin, who like her anti-choice allies routinely identifies opponents as “enemies” and “targets,” and like them will doubtless pretend to be surprised when someone gets murdered.   And it won’t be Eric Cantor, though as the highest-ranking Jew in the Republican caucus he might be expected to remember history and hope not to repeat it.

So is there anyone left in the Republican Party to speak out, or are they all too busy hoping the Tea Partiers don’t come for them?

Stay tuned.