When problems present themselves at the state level, it is the duty of state lawmakers to explore potential solutions. On the question of defining purely public charities, there is no denying that a problem exists. The Supreme Court’s decision in the 2012 Mesivtah vs. Pike County Board of Assessment Appeals case opened a Pandora’s Box that threatens to waste not only taxpayer dollars dedicated to local governments, but also the precious resources donated to worthwhile charities. I introduced Senate Bill 4 as a part of the solution to that problem.
Some have questioned the purpose of my legislation and expressed fears that my bill would relax the standards for an organization to qualify as a purely public charity, shifting a larger financial burden on municipalities to make up that tax revenue. My intention is not to expand the number of charities that qualify for a tax exemption, but rather to set clear, concrete standards by which a purely public charity can be defined. I welcome an open and honest discussion of how these standards can be applied, but those discussions are moot so long as the courts continue to flout the will of the General Assembly.
When lawmakers first passed the law defining purely public charities in 1997, it was in response to the legal uncertainties created by the judicial branch. For more than a decade, the vague standard applied by the courts led to numerous charities wasting money on litigation instead of fulfilling their mission of benefitting those in need. To rectify that problem, lawmakers began a long process of soliciting input from all stakeholders – including charities, local officials and taxing bodies – to create an air-tight standard for defining charitable organizations. The result was a strong law that functioned properly for 15 years, until the courts decided to ignore it and return to the old, failed standard.
Concurrent with giving the General Assembly the exclusive right to define purely public charities, we need to have a frank conversation about how these standards should be applied. We should follow the example set by lawmakers 20 years ago and work with all interested parties to reach a compromise that promotes the incredible work of Pennsylvania’s nonprofits while ensuring municipal governments aren’t economically hamstrung by hosting charitable organizations. This process began recently with a hearing of the Senate Finance Committee, and it should continue as Senate Bill 4 moves through the legislative process.
No matter how we define purely public charities, it is clear that the judicial approach to purely public charities has been nothing short of an unmitigated failure that only serves to enrich lawyers. The best way to fix this problem is to take it out of the court’s hands.
CONTACT: Zachary Peirson (717) 627-0036