Museums USA

This is not a tax, says Boston’s mayor

Boston’s leading museums and charities face sharp rise in “voluntary” payments to city

Mayor Menino at the opening of the MFA’s Americas wing, 2010

boston. The Museum of Fine Arts was dismayed to learn that the city of Boston is requesting a payment of $250,000 this year under new rules for the amount that not-for-profit organisations have to pay in lieu of taxes. The city plans to quadruple the bill to more than $1m by 2016.

The steep rise in contributions is a result of the Mayor of Boston Thomas Menino’s revised Pay­ment in Lieu of Taxes scheme, known as Pilot. The art museums, and the city’s other not-for-profit organisations owning property that is worth more than $15m, face paying a fee that is based on 25% of what they would have to pay if they were charged the city’s commercial tax.

Previously, the museum only paid the city $46,000 to $65,000 a year. Meanwhile, the city’s Institute of Contemporary Art is being asked to pay $17,000 this year, a sum that will increase to $86,000 by 2016.

Tax exempt

“For 140 years we’ve been serving the city of Boston and the community of New England at no cost whatever to that community,” says Malcolm Rogers, the director of the Museum of Fine Arts. “We are a huge economic generator for the city and that’s why there should be investment in the arts, not taxation.” He warns that increasing Pilot fees will lead to cuts in activities and jobs at the museum.

Ford Bell, the president of the American Association of Museums, says: “To say, ‘now we are going to tax them, but we’re not going to call it a tax’, is very disingenuous.” In the US, charities are tax-exempt organisations, so the Pilot payments are technically voluntary. But to say “no” would risk the good working relationship that many of these not-for-profits have with the city of Boston.

The escalation in Pilot payments comes after a nine-member task force set up by Mayor Menino in 2009 recommended that the scheme be reformed. Since the 1970s more than 30 charities have made annual contributions towards the cost of public services, such as the fire and police forces and street maintenance. The Museum of Fine Arts’ payments were linked to the cost of a permit to use its parking spaces.

Members of the taskforce identified inequalities in the sum each of Boston’s leading charities contributed. Ronald Rakow, the city’s commissioner of assessing, says that in the past the city negotiated payments on an individual basis with large medical and educational institutions and only a handful of cultural bodies. The Museum of Fine Arts was the only art museum charged until the Institute of Contemporary Art was added this year. The latter moved to its $51m, 65,000 sq. ft, Diller Scofidio and Renfro-designed waterfront building in 2006. Now that the Isabella Stewart Gardner Museum has added a wing (see p15), it may also be liable for the charge, but no request has been made for 2012.

Charities’ payments in lieu of taxes raised $34.8m for the city in 2011, or 1% of its annual budget. The mayor’s task force calculated that if the city’s 12 big hospitals and 16 universities paid commercial taxes, they would have raised $345m in fiscal year 2009. Tax on property is the city’s largest source of revenue, even though 52% of its land is not taxable because it is occupied by public buildings or those of tax-exempt organisations.

Sean Ryan, a losing candidate in November’s city council election, says: “There is a finite number of ways that the city gets revenue and what politicians are trying to do is find the one that will lose them the least number of votes so they’ve picked [Pilot].”

Looking for new ways to raise money is partly the result of state aid from Massachusetts to the city falling from $428m in 2002 to an estimated $223m in 2012. “Mayors meet all the time and model their city after what has worked in other cities. If Boston successfully gets more money with Pilot, then I don’t see why other cities wouldn’t follow,” Ryan says.

The task force recommended that organisations should qualify for discount credits of up to 50% of the Pilot charge according to the benefits that they provide to the Boston community. These are defined as having “[a] direct impact on Boston residents, not the tourist industry”, says Rakow.

Demonstrating community benefits provided by universities and hospitals is easier to quantify than those provided by museums, however. No mention was made of the Museum of Fine Arts’ contributions to the local community during the task force’s discussions, as recorded in meeting minutes. However, the minutes do record that someone remarked on the cost of the museum’s Foster and Partners-designed Art of the Americas wing, completed in November 2010. The museum gave “next to nothing” to the Pilot programme, they noted.

Rogers says that the museum was never included in the discussions about the Pilot scheme, and believes the task force added art museums “at the last minute”. He warns that “there should be more powerful advocacy amongst museums to act as a united front”, and fears that museum donors will be less inclined to give if they cannot be assured that their donations are for specific museum-related purposes, such as an arts endowment, and not for general city services.

Bell says: “[Museum] trustees must be aware of these issues and actively involved in communicating the importance of these institutions.” The fact that museums in Boston have not formed a coalition to negotiate with the mayor is part of a much larger problem of how museums are viewed in America, he says.

Bell calls the prospect of cities levying fees a “kind of perfect storm” when funding for arts and culture is already under national threat with President Obama’s proposed jobs bill to cap deduction for charitable giving at 28%.

Mayor Menino is a trustee of the Museum of Fine Arts, having joined the board when first elected mayor in 1993. When he attended the opening of its Art of the Americas wing in 2010, he praised the director’s commitment to providing access to all. “The Museum of Fine Arts is more than just culture. It is about community. The Museum of Fine Arts serves people of all ages, backgrounds and abilities,” said Menino.

The mayor is also due to cut the ribbon at the opening of the Isabella Stewart Gardner Museum’s wing on 19 January. Stephen Kidder, the chairman of the mayor’s task force and the city’s former commissioner of revenue, is a trustee of the Gardner museum.

As we went to press neither the Museum of Fine Arts nor the Institute of Contemporary Art (ICA) had paid their Pilot fee this year. “We are looking forward to discussions with the mayor about our role in the city and everything we do,” says Rogers. The ICA declined to comment because it is “in discussions with the city”, says a spokeswoman. Rakow says the new programme is stricter: “We are not negotiating individual amounts.”

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Comments

9 Jan 12
17:16 CET

PAUL PEARSON, BROOKLYN

Cities have other remedies available for bolstering revenue without enacting devious new taxes that subvert prevailing rules for not-for-profit organizations that preserve cultural resources and improve quality of life and communal well-being for all citizens. Museums, historical sites, NFP arts and theater centers, et al. are magnets for local families and tourists alike. They create a positive climate for profit-generating local businesses that bring jobs and tax revenue to urban areas that would be little more than industrial parks without a stabile core of culturally vital organizations. Quality cultural venues make some cities worth living in and spending time exploring. Cities looking to support continuing growth and maintenance of essential services for the future should be cultivating and investing in the success of its museums and educational institutions, instead of depressing their capacity to serve the broad public in unique ways that businesses and government cannot.

6 Jan 12
20:8 CET

STEVE, DENVER

Perhaps Boston museums should start sending bills to the City for a percentage of the ancillary spending they bring the community. I visited Boston to see the museums and spent quite a bit of money there.

6 Jan 12
20:8 CET

MAUD LYON, DETROIT

In many ways, government is trying to shift costs to the nonprofit sector. Arts and culture education programs have been reduced in schools for decades, just when we most need students to learn creativity, problem-solving skills and independent thinking. Raising the costs of operations through programs like Pilot makes the work of museums, art centers, science centers and performing arts even more difficult, and less accessible to the students who need their benefits the most.

6 Jan 12
14:14 CET

RICHARD, SAN FRANCISCO

In many cities in the U.S. and the world, museums are literally owned, not just as part of the public trust but legally, by the city (take San Francisco for instance). If the city is funding a major portion of the museums' operations, would it then assess a pilot or a tax? I don't think so. Museums by their very definition are a public trust, taxing them by any name is a ludicrous notion. Just because the MFA, Boston has found a way to fund itself so successfully is no reason for the city to "catch a ride" at what will be the dissolution of programs and jobs, as Rogers points out, and ultimately the expense of tax payers.

5 Jan 12
21:57 CET

CAROL KILMAIN, BOSTON

I believe that the Universities, Hospitals, museums should pay their fare share of property taxes. They have had a free ride long enough. Its time for them to step up and support our hard working middle class who are the ones keeping the city going.

4 Jan 12
19:15 CET

JSHORE, BOSTON

Lets not confuse “not-for-profit” with “charity.” The ICA only contributes $17,000 to the city! I pay more in taxes! This Pilot is a way of fairly getting organizations to pay their fair share. The Boston Public Schools Art Department was decimated for lack of funds for years. If these “not-for-profits” had been paying their fair share all along Boston Public Schools kids could have enjoyed the same art experiences as their suburban peers. A 50% “community service credit” is more than generous for a few BPS field trips and teacher workshops, and more than most homeowners in Boston would give the ICA or MFA! Given Boston’s economic situation and inability of the City to settle its municipal service contracts in a fair and equitable manner, the ICA should volunteer to pay $86,000 and the MFA should volunteer to pay $1,025,000 NOW! I feel that it is outrageous that the city is giving the ICA and MFA a 4-year grace period! It is time the ICA and MFA stepped up to the community plate.

4 Jan 12
16:1 CET

ELLEN JONES, BOSTON

This is an irresponsible and totally uncultured call. Museums are not equal to commercial enterprises, period. Menino will lose a huge base of supporters in education and culture- oriented Boston.

3 Jan 12
15:24 CET

PETER, LOWELL

I think Mayor Menino is violating his duty as a trustee of the MFA. Why is he a trustee and working against the museum?

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