Proving A Nonprofit’s Worth: Chicago Nonprofits Battle to Reclaim Water Exemption

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For decades, the City of Chicago did not charge its nonprofits for water usage, implicitly recognizing their tremendous societal value through such exemption.  That policy changed in 2011, after Mayor Emanuel pushed through a new plan calling for nonprofits to start paying for their water usage, at 60% this year, and 80% next year. 

Since the change went into effect, Chicago churches and other nonprofits have rallied to repeal it.  Citing the tremendous community benefits provided by such organizations, they argue that this charge economically harms nonprofits far too much.  (In particular, the requirement for installing new water meters in many older churches has been financially onerous.)

This debate helps illustrate why nonprofits need to continually demonstrate that their mission and activities are worthwhile.  This focus is important not only for obtaining and maintaining government privileges, but also for successful fundraising and long-term viability.   Here are some key considerations to help nonprofits demonstrate their worthiness.

First, hone your mission and stay relevant in this changing world.  Are you making a difference that others can see?  Second, be well governed and well operated.  There’s nothing like financial or leadership scandals to sharply diminish a nonprofit’s perceived value.   Third, collaborate strategically with others.  That’s what the Chicago nonprofits have done, with the pleasant effect of much media attention and municipal responsiveness.    Hooray for grass-roots efforts to improve the world!  Fourth, use reporting tools like the IRS Form 990 annual information return to describe effectively how your nonprofit has achieved laudable goals and used its resources well.  And finally, effectively communicate your worthiness – the opportunities abound!

Back here in Chicago, Mayor Emanuel has now proposed a compromise solution, allowing exemptions for smaller nonprofits with less than $1 million in assets.  Although this is a fairly significant step forward for nonprofits, the clear warning remains:  Prove your worth, or get ready to pay.