Cities throughout South Florida are turning to another way to make money — asking for your charitable donations.
Margate is joining the growing list of Broward cities that are creating — or re-starting — nonprofit “foundations” to raise money to supplement the city coffers.
City officials said the foundations, which are recognized as nonprofits by the IRS, can benefit from grants earmarked for charities, and also collect money from you or your neighbors — with a tax write-off — to build that dog park or foot the bill for a child to join the city baseball league.
But some charities are outraged by the unwanted competition.
“I think this is extraordinary that cities are going to step in and compete for nonprofit charitable donations which have traditionally supported the arts,” said Eric Koskoff, president of The Opera Society in Fort Lauderdale, an affiliate of the Florida Grand Opera.
“Cities are in a position to impose and collect taxes to support [their projects] and the citizens have no choice,” he said. “All of a sudden for them to step in as well using 501(c)3 [non-profit] status to raise money for essentially the same purposes, given the economics of the times and the difficulty of supporting and maintaining superb arts organizations, for cities to step in here, it seems to me the purpose of 501cs is being abused.”
The Margate Recreation Foundation was created in 2010, but it’s been inactive. The City Commission agreed last week to “bring it back to life” and sit down for the first time and plan strategy how to start from the beginning and make it a money-making machine.
The $5,070 in the Foundation’s bank account will be spent on marketing, and developing a business model which could include the slogan and logo, said Michael Jones, the city’s Parks and Recreation director.
“We don’t just want corporate donations, we want private donations — Margate families who have the resources to give any kind of contribution throughout the year is the goal for the Foundation,” he said.
“If the public chooses to contribute and donate to the support of the function of the Foundation, that’s their choice,” he said. “Some charities battle disease, some battle special needs, our focus is a higher quality of life for our community through parks and recreation.”
The benefits of the Foundation don’t replicate what taxpayers are already paying for; instead it’s for “services and programs outside the scope of the city,” he said. “The intention isn’t for city services, it’s funding assistance for the overall good of the community.”
Other cities have mulled the idea of nonprofits, but decided it wasn’t worth the hassle.
Lauderdale Lakes city attorney James Brady said about a decade ago, the city considered creating a nonprofit to buy houses and flip them to police officers, but the “project became bigger than we could support,” he said. “The fundamental worry was it would be too expensive.”
In Tamarac, the Parks and Recreation Foundation of Tamarac (PAROT) was formed two years ago. It hasn’t received grant money yet, although city officials said they’ll be exploring grants in the future. A website is expected to be launched next month.
Instead, it has held golf and bowling tournaments, and received money through raffles and individual and business contributions, raising $30,000. It has been used for wheelchair-accessible playground equipment, and summer camp scholarships to children who can show proof of a financial need.
“The Foundation was created to supplement what is currently being offered,” said Greg Warner, the city’s parks and recreation director. “Through budget reductions over the years, we have not been able to offer the same level of programming and events.”
North Lauderdale has raised $130,000 since it created the North Lauderdale Recreation Foundation in 2008. The James L. Knight Foundation and Target each donated $5,000 for the city library, and donations from professional golf associations have benefited the city’s youth golf program.
“The Foundation gives us a way to raise money as a nonprofit and then we turn around and give that money to the city,” said Michael Sargis, assistant city manager.
Other cities and towns with foundations include Southwest Ranches, where the Aster Knight Parks Foundation was incorporated in 2009 by a former councilman and has raised about $47,000. Wilton Manors has the Island City Foundation, formed in 1997, and has raised about $20,000 from grants and private donations.
In Margate, Vice Mayor Lesa “Le” Peerman, who is the chairwoman of the Foundation, said ideas being considered include spending the money on a barbecue grill at a park, or toward the creation of the long-talked about dog park.
But Delray Beach Lions treasurer John Parke thinks government should stay out of the fundraising business. He said he worries there’s the potential for a quid pro quo, with businesses or companies or even individuals vying to get favors and contracts in exchange for “donations.”
“When people give to the Lions Club, they want to help our projects. Nobody’s wanting money back,” he said.
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Copyright 2013 – Sun Sentinel
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Tags: Accounting, IRS, Nonprofit, State and Local Taxes, Taxes
