soup kitchen

Mealtime at the Capucin Soup Kitchen in Detroit, Detroit, 9 Dec 2008/Carlos Barria

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.