Now not the time to hike PILOT payments for arts organizations

The creative economy faces enough challenges already following pandemic devastation

BEFORE THE PANDEMIC, arts nonprofits in Boston were a potent driver of the local economy, supporting at least 45,889 full time jobs, generating over $1.3 billion in spending, and bringing in $34.9 million in local tax revenue annually. 

But over the last year, they’ve sustained devastating economic losses. A survey of 314 arts organizations in the Greater Boston region by the Mass Cultural Council shows that they’ve lost $423 million in revenue over the past year.

Now is not the time to ask cultural nonprofits to contribute more, which is what the Boston City Council has in mind with a proposal to increase the cash payments that nonprofit organizations make to the city through the Payment In Lieu of Taxes (PILOT) program.

PILOT is a nearly century-old initiative that was designed to increase city property tax revenues. Under the voluntary program, land-owning nonprofits, which are tax exempt by law, make payments to the city for the basic services they receive such as trash collection and public safety.

Until 2011, the city negotiated PILOT payments individually and only requested them of medical and educational institutions with significant land holdings. At that time, the Menino administration instituted a standard in which nonprofits with more than $15 million in real estate holdings would voluntarily contribute 25 percent of the property taxes they would pay were they not exempt. Up to half of that amount could be calculated in terms of credit for the “community benefits,” such as scholarships for local youth and free public programming.

The change meant that a handful of Boston’s largest arts and cultural nonprofits, such as the Boston Symphony Orchestra, the Museum of Fine Arts, and the New England Aquarium, would now be asked to make PILOT payments. It proved a revealing moment of Boston’s lagging support for the arts. A 2015 Boston Foundation report noted that in FY2012, the city collected $187,000 from arts and cultural nonprofits in PILOT fees while investing just $130,000 dollars in its budget for arts and cultural grants. Boston holds the distinction of being the only city in the country that requests funding from arts and cultural nonprofits.  

It’s true that the program is voluntary and that the majority of Boston’s arts nonprofits—including Boston Gay Men’s Chorus—are off the PILOT hook. But we are affected nonetheless, as are all small organizations and artists that interact with these larger institutions. The costs of increased PILOT payments trickle down to us in the form of increased costs for the use of their rehearsal and performance spaces, technical assistance, and other infrastructure that smaller organizations lack.

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If there is agreement among policymakers that charitable organizations are more of a drain on local resources than what they contribute to the public good, the answer isn’t to undermine tax law, which has exempted charities from federal, state, and local income tax from the inception of the modern tax code in the late 1890s. The solution is to address the issue directly through the legislative process at the state and federal level. But before doing any of that, policymakers should be asking how they can better support community-based arts organizations, which find ways to make arts and culture accessible to more and more people—often on a shoestring—to improve our communities and educate, uplift, inspire, and bring solace in troubled times such as those we are living in now.

Craig Coogan is the executive director of the Boston Gay Men’s Chorus.