Handbook of Research on Nonprofit Economics and Management
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Handbook of Research on Nonprofit Economics and Management

Second Edition

Edited by Bruce A. Seaman and Dennis R. Young

Building on the success of the first edition, this thoroughly revised and expanded edition explores (1) areas of general agreement from previous research; (2) areas of conflicting results and unexplored questions; (3) the relative roles of theory, data availability and empirical analysis in explaining gaps in our knowledge; and (4) what must be done to improve our knowledge and extend the literature. Selected original chapters addressing especially challenging topics include the value of risk management to nonprofit decision-making; nonprofit wages theory and evidence; the valuation of volunteer labor; property tax exemption for nonprofits; when is competition good for the third sector; and product diversification and social enterprise; international perspectives; the application of experimental research and the macroeconomic effects of the nonprofit sector.
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Chapter 20: The property tax exemption for nonprofits

David L. Sjoquist and Rayna Stoycheva

Abstract

We explore what we know and don’t know regarding the economic effects of the property tax exemption for nonprofits. We first review how the eligibility criteria differ across states and estimates of the magnitude of the tax benefit. We then consider the following questions: Do nonprofits use this cost advantage to increase the public good or for their self-interest? Does the exemption affect the choice of for-profit versus nonprofit status, of owning versus renting, where to locate, the nonprofit capital-labor ratio and capital-land ratio and its size? Does it affect the nonprofit share of the market? Does the loss of government revenue get capitalized into the value of property? Finally, we consider efforts to remove the exemptions through legal action and through PILOTs and the trend for local governments to provide additional subsidies to encourage them to locate within the jurisdiction.

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