As our state legislature debates major reforms to the state tax code, the decisions our lawmakers and governor make over the coming weeks will have an enormous effect on our economic future.
I commend our legislative leaders as, undoubtedly, reform is long overdue. As a business executive who is also active with charities, I have serious concerns about how North Carolina’s charitable nonprofit sector – and the millions of residents it serves – could be badly hurt in this process.
I have had the good fortune of serving as a leader of one of the largest pharmaceutical companies in the world, and I have worked with a variety of charitable nonprofit groups, including entities that promote health research, education and scientific advancement. From these diverse perspectives I have seen first-hand the important link between the business world and the nonprofit sector.
To build our business sector, grow our economy and put North Carolinians back to work, we need a tax structure that attracts jobs and rewards businesses for locating here.
But even with financial incentives, very few businesses will come, and few will stay, unless we offer vibrant communities with a high quality of life. It is our charitable nonprofit sector that plays a critical role.
Charitable nonprofits can be a part of almost every aspect of our lives, including child care, K-12 and higher education, arts and entertainment, recreation, parks, music, religion and health care. For our neighbors in need, charities provide food, shelter, clothing and emergency aid.
Most North Carolinians engage with, and depend on, a nonprofit organization every day in some manner – and may not even realize it.
We have a vibrant charitable nonprofit community – one that is largely responsible for the quality of life we enjoy today and one that is threatened by legislation under consideration in Raleigh.
Some proposals may impose on charitable nonprofits a sales tax that would significantly reduce resources for their programs and services – not by a little bit, but rather by hundreds of millions of dollars.
Requiring charitable nonprofits to pay a sales tax could harm the entire state. Whether it’s a small town church offering food and shelter, a community foundation providing support to numerous and diverse local entities, a hospital or a private college or university, the forecast is the same: A sales tax will lead to fewer programs and services, and lost jobs.
This proposed sales tax provision also raises two important questions.
First, do we want charitable nonprofits to send a significant portion of their resources to the state to be spent on government programs, or do we want nonprofits to continue to reinvest in their communities through the services they provide and the people they serve?
I believe in smaller government, and I think the best approach for charitable nonprofits is to help preserve their resources in their local communities.
Secondly, individual charitable contributions are a large part of most nonprofits’ operational funds.
If we make a contribution to a charity, do we want the state to take some of that money for government activity? In effect, that’s what a new nonprofit sales tax would do.
Reforming our rather antiquated tax system is a laudable goal; it can help our economy and job base start growing again.
But, clearly, charitable nonprofits, most of which struggle to meet their budgetary goals already, are an unwise and impractical place to try to tap.
The recent recession has left many charities struggling to do even more with less.
North Carolina’s charitable nonprofit organizations strongly oppose losing tax-exempt status, and they are very concerned about the harsh and unwanted effects that the sales-tax proposal could bring.
I urge our lawmakers to pursue the sound policy of preserving the tax-exempt status of all North Carolina charitable nonprofits.
Robert Ingram, among other roles, is chair of the Research Triangle Foundation of North Carolina, the GlaxoSmithKline Foundation and Elan Corporation.