How Voluntary Are Nonprofits' Payments to Localities?

Many private colleges and universities make voluntary payments to localities to reflect their use of local services without paying property taxes. A study released Monday morning by the National Bureau of Economic Research suggests that there are clear patterns in the levels at which colleges and other nonprofits pay. Using data from Massachusetts, researchers found that payments are higher in localities where property taxes are higher. “These patterns are consistent with voluntary PILOTs [payments in lieu of taxes] acting in a manner similar to low-rate, compulsory real estate taxes,” says the abstract of the paper.