Thousands of small U.S. charities are likely to close this year as cautious donors and governments tighten spending and some states consider removing nonprofit tax breaks, experts said during a panel discussion on “The New Nonprofit Reality” on Wednesday.
“States are looking for any opportunity for tax revenue this year and nonprofits are increasingly a very big target,” said Stacy Palmer, editor of The Chronicle of Philanthropy.
Hawaii has proposed a 1 percent tax on charities, Kansas is considering making nonprofits pay sales taxes and Pennsylvania is thinking about removing a property tax break for charities, The New York Times reported.
There were 1.9 million nonprofit groups in the United States in 2006 accounting for 5 percent of gross domestic product, according to figures from Independent Sector. All are exempt from federal income tax.