MARC Community Resources, a 501(c)(3) non-profit organization providing residential and day services to individuals with intellectual, physical, and developmental disabilities throughout Middlesex County, recently received notification of denied tax exemption on several group homes, as well as two-day programs owned and operated in Cromwell.
This tax forces community nonprofits like MARC, burdened by years of state budget cuts, to choose between costly litigation and paying taxes on property that is exempt by state law. Either of these options takes critical funding away from essential services for MARC’s program participants.
Chronic under-funding and budget cuts for essential services is making it almost impossible for nonprofits to fulfill their missions.
While exempting property taxes for nonprofits does not solve the systemic funding crisis, it is a small but essential resource for nonprofit providers in an era of diminishing resources. Property tax exemptions for nonprofit organizations must be protected if they are to continue their mission driven work of strengthening communities by providing quality, cost effective, and life sustaining services for children and families.
The cost of operating our group home properties is set and funded by the State of Connecticut through our room and board rate. The state legislature has frozen our room and board rates for several years and we have had to absorb all increased costs to basic needs such as food, utilities, and repairs and maintenance owing to inflation. Having to divert both fiscal and human resources to battling municipalities over our charitable status further deviates from our ability to provide quality services while satisfying regulatory requirements.
Group homes are already losing money and are relying on fundraising dollars to make ends meet. We cannot be forced to pay property taxes because there are no further cuts that can be made in our group home and day services budget without compromising the health and safety of program participants.
We have had to increase fundraising efforts to cover the shortfall in the cost of care, unfunded mandates and general A&G. Donor dollars will need to be used to cover the cost of taxes assessed by towns. This is neither the donor nor provider intent for fundraising dollars and borders on unethical. If municipalities are not prevented from taxing charitable organizations, the State of Connecticut must increase rates to ensure solvency to cover the cost of care, operations, and to provide a livable wage. Current room and board rate(s) will not reimburse us for the additional cost of taxes.
More globally, taxing property owned by nonprofits for charitable purposes erodes the social compact between community nonprofits and government. Nonprofits exist for public benefit and must operate for specific charitable, educational, or religious purposes. The mission of all nonprofits is to improve the health and well-being of our local communities, enhance the quality of life and serve the public good. In exchange, nonprofits are exempt from property, income and sales tax, and have access to tax-deductible contributions from individuals and corporations, and others.
MARC is hopeful that the state legislature can take corrective action and legislatively protect nonprofits from property taxes. If it is the intent of the state to allow the towns to tax non-profit organizations to add to their tax base, it is important you understand the impact on the individuals we serve; as well as the strength of our organizations.
Benjamin Davies is Manager of Advocacy & Outreach at MARC Community Resources.