Client Bulletin: Let the District of Columbia’s Tax and Financing Policies Provide Savings To Your Nonprofit

By Kevin P. Stogner.

If you manage or serve on the board of a nonprofit organization with a location in the District of Columbia, you may be interested to learn of a couple of little known DC government programs that could potentially save your organization a lot of money in property taxes or debt financing costs.  In 2015 alone, eligible institutions have received over $320 million in low cost bond financing through the DC Revenue Bond program.  On the tax side, the potential benefits to your organization are capped only by the actual cost of your organization’s property taxes, which can result in a savings of tens or even hundreds of thousands of dollars per year for a nonprofit seeking to allocate its often limited resources most effectively.

Real Property Tax Abatement Program

The first program is the real property tax abatement program.  If your organization owns its own real property and devotes all or a portion of its physical space to a qualified use, you may be eligible for a full or partial real property tax abatement.  Some specifically permitted uses include:

  • Buildings belonging to and operated by nonprofits, which are used for purposes of public charity principally in the District of Columbia;
  • Buildings belonging to and operated by schools, colleges, or universities which are not organized or operated for private gain;
  • Art gallery buildings belonging to and operated by nonprofits;
  • Library buildings belonging to and operated by nonprofits;
  • Hospital buildings belonging to and operated by nonprofits;
  • Buildings owned by and actually occupied and used for legitimate theater, music, or dance purposes by a nonprofit;
  • Buildings used by churches, religious corporations or societies for religious worship, study, training, missionary activities, or pastoral residences;
  • Cemeteries dedicated to and used solely for burial purposes and not organized or operated for private gain;
  • Certain multifamily, single family rental and cooperative housing for, and individual condominium units rented to, low and moderate income persons; and
  • Certain supermarket developments.

Even if you do not meet the specific criteria necessary to obtain an administrative abatement, you can seek a legislative tax abatement from the Council of the District of Columbia.  Organizations as diverse as the National Geographic Society, the American Pharmaceutical Association and the Brookings Institution have had real property tax abatements written specifically into the law on their behalf.

DC Revenue Bond Program

The second program is the District of Columbia Revenue Bond Program.  This initiative provides low-cost bond financing at tax-exempt interest rates that are usually below conventional rates, to assist borrowers with lowering the cost of funds for capital projects such as building acquisitions, renovations or new construction.  Frequent beneficiaries of this program include professional and other associations; elementary, secondary, college, and university facilities; museums and other cultural institutions; and manufacturers. 

Manufacturers and nonprofits are eligible for this tax-exempt financing.  Nonprofits may borrow an unlimited amount through the program, while manufacturers are eligible for up to $10 million of revenue bond financing.  

To find out if you are eligible or to ask other questions about either of these programs, please contact Kevin Stogner at (240) 883-6235 or kstogner@potomaclaw.com.

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This Bulletin is not intended as legal advice.  Readers should seek professional legal counseling before acting on the information it contains.