FEBRUARY 1995
VOLUME 2, ISSUE 6 / $5.00
PhflantbroDvJoumal
Taxing the tax-exempt
U.S. cities question nonprofits’ tax-free status
North Carolina nonprofit leaders
say they feel relatively safe
from legal challenges to their
tax-exempt priviieges. But some
worry that cases in the
Northeast point to a growing
trend in the opposite direction.
By the Philanthropy
Journal Staff
i^ecent challenges to nonprofit
A^tax exemptions in some
/ I Northeastern cities have
shown nonprofits that they can no
longer take their tax-free status tor
granted.
• In Pennsylvania, officials in
Pittsburgh have launched a cam
The tax-exempt status of the Atlantic
Coast Conference's Greensboro
headquarters was recently chal
lenged because for-profit TV con
tracts are negotiated there.
paign aimed at nonprofit hospitals
and universities that has netted $1
million dollars annually in “payments
in lieu of taxes.”
• In the District of Columbia,
neighborhood activists are demand
ing that government leaders collect
property taxes from some of the
large nonprofits that occupy valuable
city lots.
• In Connecticut, New Haven offi
cials have successfully persuaded
Yale University to pay annual service
fees of $17 million to the city and
property taxes for its sprawling golf
course.
These cases and other scattered
protests against nonprofit tax-
exempt status are signs of what
some watchdog groups are calling a
“revolt” against the nonprofit sector.
In North Carolina, no such revolt
has occurred so far. There have been
isolated court cases challenging non
profit exemptions but, in most cases,
judges have sided with nonprofits.
Still, sector leaders and
researchers don’t discount the possi
bility that more serious challenges
may lie ahead.
“I think the whole sector is some
what under attack,” says Shannon
St. John, the executive director of the
Triangle Community Foundation in
Research Triangle Park. “The
Triangle region is generally pretty
supportive of the nonprofit sector.
But one of the things that’s clear to
me is that the lines between what is
for-profit, what is nonprofit and what
is public are pretty blurry... In any
nonprofit operation, there may be
some component that may not be
serving the charitable purpose. If
that’s the case, they should be taxed
for that.”
AN UNTAPPED SOURCE
The main impetus for challenging
the tax-exempt status of nonprofits,
experts say, is money. In cities and
towns in which local governments
are strapped for revenue, the non
profit sector represents a source of
untapped income.
Look for TAX, page 22
Rural exposure
Public-private
partnerships
match doctors
with small towns
Foundations, nonprofits and state
agencies have joined together
to help address North Caro
lina’s critical shortage of prima
ry care doctors in rural areas.
By Barbara Solow
MaKhall
D r. Marianna Daly considers
herself a survivor. Unlike
many of her colleagues who
have left smaU-town practice for bet
ter-paying, less demanding jobs in
urban areas, Daly has stayed in
rural Madison County in the moun
tains of Western North Carolina.
One of the main reasons is the
nonprofit medical practice she
belongs to. Built with support from
the state Office of Rural Health and
Resource Development, the Marshall
Walnut Medical Center was
designed with the needs of rural doc
tors in mind.
“Our group is different from the
traditional, solo rural practice out
there,” Daly says. “Most of us chose
this group because we wanted con
trol over our family lives. I work 35
hours a week and I’m paid by the
hour. Groups like ours are replacing
solo practitioners because of these
lifestyle issues.”
The Marshall center is one of a
growing number of health-care prac
tices aimed at ending the shortage of
physicians in rural communities in
North CaroUna.
Supporters describe these prac
tices - backed by foundations, non
profit medical associations and state
agencies - as building blocks for a
new “healthcare infrastructure” in
communities that now lack adequate
care.
Sixty-two of North Carolina’s 100
counties suffer from “significant
shortages” in primary care physi
cians, according to the state Health
Planning Commission. Fifty-eight
counties have been designated
Health Professional Shortage Areas
- defined by the federal government
as areas where the ratio of doctors
to people is less than one in 3,500.
Funders and health-care experts
worry that the growth of “managed
care” - a delivery system based on
cost and performance - will only
exacerbate the shortages.
“If you leave things to the design
of the HMDs or insurance compa
Physician Karen Smith (left) examines Travis Mann while his mother,
Linda, looks on. Smith practices at the Hoke Family Medical Center in
Western North Carolina, one of a number of health facilities in rural
areas supported by nonprofits and foundations.
Photo courtesy of the N.C. Office of Rurol Health
nies, they are going to go into geo
graphic areas where it is most bene-
ficid to them,” says W. Vance Frye,
director of the health care division of
the Kate B. Reynolds Charitable
Trust in Winston-Salem. “That is
going to create a void in the low-
income or underinsured areas and
put additional strain on providers.”
Jim Bernstein, director of the
N.C. Office of Rural Health, says
attracting physicians to rural areas
comes down to two main issues:
time and money.
In the absence of colleagues or
assistants, small-town physicians
often must work long hours with lit
tle opportunity for time off.
As for salaries, Bernstein says,
“In the last 18 months, there has
been a tremendous widening of the
gap between rural physicians and
physicians in urban areas.
“Starting salaries are about
$80,000 in the rural areas, versus
about $125,000 in urban areas.”
Since it was founded in 1973, the
Office of Rural Health has estab
lished 60 primary care centers and
recruited more than 1,200 health
care providers to “underserved”
areas throughout the state.
The agency relies on North
Carolina’s network of Area Health
Education Centers (AHECs) to help
recruit nurse practitioners and
physicians assistants to rural areas
and to pay off school loans to doc
tors serving those communities.
Foundations also are key players
in the effort to improve rural health
care. Among the leaders are:
• The Reynolds Trust, which
gave nearly $5 million to the North
Carolina Medical Society
Foundation to establish a
Community Practitioner Program
that supports rural doctors through
loans, technical assistance and
equipment purchases.
• The Duke Endowment in
Look for DOCTORS, page 15
Pulling together
Nonprofit
in
Eayetteville
Faced with a transient military pop
ulation and the lack of big founda
tions and corporations, Fayette
ville nonprofits are finding new
ways to raise needed dollars. This
story is the first in a series of
Philanthropy Journal reports on
the local fundraising environment
in communities throughout North
Carolina.
By Ealena Callender
Fayetteville
A s nonprofits in Fayetteville
/\ work to meet the growing
/ 1 needs of their community, they
face some unusual challenges in raising
the necessary funds.
The strong pres- o
ence of Fort Bragg ^oENSM
and Pope Air Force
Base, the scarcity of QF
large foundations and
a population with t-h- Af^fp
comparatively low JjJiXjJJd
per-capita incomes
combine to have a significant impact on
fundraising for nonprofit organizations,
community leaders say.
Fayetteville, the Cumberland County
seat, is the fourth-iargest metropolitan
area in North Carolina. Its diverse popu
lation is more than 30 percent African-
American and includes military families
from around the globe.
Look for PLACE, page 15
NSIDE
Connections 3
Corporate Giving 12
Grants and Gifts 17
In February 16
Job Opportunities 20
Opinion 10
People 17
R.S.V.R 16
Professional Services...!8
FOUi
VOLUNTEERS
Building families
in Fayetteville
A program providing class
es and activities to parents
and children has helped
strengthen a Fayetteville
neighborhood.
Foundation salaries
hold steady
While U.S. foundations
gave moderate pay increas
es to their executives and
program staff lost year, the
vost majority continue to
operate without paid
employees.
AmeriCorps off
to strong Tar Heel
start
Five hundred AmeriCorps
members ore assisting
North Carolina nonprofits.
But some wonder: Will it
survive the new Congress?
Big-time philanthropy
in Salisbury
Due to on unusual set of
circumstances in Salisbury
that brought big business
profits to the small North
Carolina town, philanthropy
is flourishing in on unpre
dictable place.
• Page 4
• Page 6
• Page 8
• Page 12
African-American
group looks to future
When it was founded 25
years ago, AFRO Inc. was
thought to be the only
notional membership orga
nization for African-Amer
ican fundraisers. The field
has diversified and so hove
^RO's ranks.
• Page 14