Allied Charities of Minnesota

News

  • 14 Mar 2017 12:58 | Amanda Horner (Administrator)

    This article was written by Olivia Alveshere and originally appeared in ABC Newspapers March 14, 2017. View the original article here.

    The Spring Lake Park Lions Club paid more in taxes than it was able to give away in fiscal year 2016. After expenses, the club turned over 80 percent of its net receipts to the state.

    The Spring Lake Park Lions paid $438,654 in taxes on charitable gaming. The amount the club was able to give to charitable causes pales in comparison: $156,175. Photo submitted

    The Spring Lake Park Lions gave $156,175 to various charities in fiscal year 2016, but the group paid more than double that amount in taxes and fees: $438,654.

    The Lions aren’t an anomaly, and Allied Charities of Minnesota is going to bat at the Legislature for 1,200 organizations that hold gambling licenses across the state.

    We didn’t join these organizations to be tax collectors for the state, and that’s what’s happening,” said Allen Lund, executive director of Allied Charities of Minnesota.

    Charitable gambling generated $1.5 billion in fiscal year 2016, and $1.3 billion were returned in prizes. After prizes were paid out, the Minnesota Gambling Control Board’s annual report shows organizations statewide spent 50 percent of remaining dollars on expenses, 28 percent on charitable contributions and 22 percent on state taxes.

    Since 2012, organizations have paid as much as a 36 percent tax on pull tabs, tip boards and electronic link bingo, which accounts for 94 percent of gambling revenue, according to Lund. Other games, such as bingo, raffles and paddlewheels, are taxed at 8.5 percent.

    Changes were made five years ago to help finance the construction of U.S. Bank Stadium. Each year, the first $37 million collected in taxes from charitable gambling goes into the general fund, and the balance goes toward the stadium. Last year, $60.6 million was collected in taxes, so just under $24 million was transferred to the stadium reserve account.

    Lund calls the stadium “the elephant in the room.”

    The Minnesota Department of Revenue certainly does not want to lose dollars earmarked for the stadium.

    Paul Cummings, tax policy manager for the department, testified before lawmakers last month, urging them to consider costs of proposed legislation carefully.

    Half of the licensed gambling organizations are allowed to make lawful contributions to themselves, Cummings said.

    “The impact of this type of transfer on the remaining tax base is unknown, but it could be much larger than $26 million,” he said.

    A bill in both the Minnesota House and Senate would exempt donations from being taxed by the state, which would save nonprofits across the states millions of dollars.

    “There is no one else that we can find in the state, whether it’s a business or an individual, that does not receive some kind of tax benefit from donating money,” Lund said. “If Minnesota businesses were taxed like we’re taxed, there would be no Minnesota businesses. They would have all left.”

    A bill authored by Rep. Bob Dettmer, R-Forest Lake, co-authored by local Rep. Connie Bernardy, DFL-New Brighton, and many others, has moved through House Commerce and Taxes committees for possible inclusion in an omnibus tax bill.

    “Charitable gambling provides an opportunity for local charitable organizations, religious institutions and other charities to invest in their communities,” Bernardy said. “Homegrown investments help our communities and neighbors thrive.”

    The Senate Taxes Committee was set to hear a similar bill authored by Sen. Carla Nelson, R-Rochester, March 8.

    Sen. Jerry Newton, DFL-Coon Rapids, has signed on as a co-author to a similar bill, authored chiefly by Sen. Eric Pratt, R-Prior Lake.

    “Every month we get an exuberant amount of requests that sometimes we have to say no to,” said Amanda Jackson, gambling manager for the Spring Lake Park Lions.

    If legislation made charitable contributions tax exempt, “then we wouldn’t have to say no to some of these good causes,” she said.

    Other Spring Lake Park organizations with gambling licenses are Minnesota Youth Athletic Services, which donated $220,683 in fiscal year 2016 and paid $268,504 in taxes, and the Kraus-Hartig VFW, which donated $2,323 and paid $25,530 in taxes in fiscal year 2016.



  • 02 Mar 2017 15:13 | Amanda Horner (Administrator)

    This article was written by Allen Lund and originally appeared in Press & News March 1, 2017. View the original article here

    To the Editor:

    There is a bill moving through the Minnesota Legislature (House File 226, Senate File 419) that would exempt donations from state tax for licensed non-profits in Minnesota that conduct charitable gaming.
    Licensed non-profits who conduct charitable gaming are currently allowed no deductions of any kind, even our donations are taxed. In Maple Grove and Osseo the non-profits conducting charitable gaming are the Maple Grove Fire Relief Association, Osseo Lions, Osseo-Maple Grove American Legion, Osseo Maple Grove Hockey Association, Maple Grove Lions and Osseo Fire Relief Association. Together in the most recent fiscal year (2016) these groups combined to pay $1.1 million in taxes while donating $1.2 million to their communities and chosen missions.
    Organizations are fast approaching a point where they will be paying more in taxes than they have for our communities and their missions. If passed the bills would provide $355,000 in relief to the Osseo/Maple Grove organizations ($132,000 in relief to the OMG Hockey Association alone). Any relief would go directly back into our communities. Senator Limmer is an author of the Senate bill. Please remember to thank him for his support when you see him. Please contact your other legislators to ask for their support of the bill.
    With your help we can help keep these six groups investing in our local communities for a long time to come. You can find out who represents you at http://www.gis.leg.mn/iMaps/districts/
    Allen Lund,
    Maple Grove
    Editor’s Note: Allen Lund is Executive Director Allied Charities of MN (Trade Association) and an Osseo Maple Grove Legion Member


  • 23 Feb 2017 14:21 | Amanda Horner (Administrator)

    Should places like the VFW have to give away portions of their proceeds? Many times they are funding community programming and they need relief.

    Watch the 2 minute interview with Sen. Mary Kiffmeyer (R-Big Lake) and Rep. Jeff Howe (R-Rockville) here.


  • 20 Feb 2017 14:51 | Amanda Horner (Administrator)

    This article was written by Brian Arola and originally appeared in the Mankato Free Press on Feb. 20, 2017. Read the original article here.

    MANKATO — Charitable gambling organizations parlayed a big sales year in 2016 into more donations to community causes.

    But they feel they could help out even more if state taxes didn't claim so much of their gross receipts. In 2016, the nonprofits donated $62 million to charities, while paying $60.6 million in state taxes, according to the Minnesota Gambling Control Board's annual report.

    The organizations may be in luck. Legislation passing through tax committees at the Capitol in recent weeks calls for charitable donations to be exempt from the state gambling tax rate.

    Similar proposals haven’t gained much steam in past sessions, but there’s renewed optimism this year might be different. Al Lund, executive director of the Allied Charities of Minnesota trade group representing 1,200 organizations statewide, said he feels there’s growing recognition that the state tax is cutting into the nonprofits' abilities to donate in their communities.

    “Our members are more and more getting to the tipping point, so more are realizing that they need to get involved,” he said.

    Currently, a charitable gambling organization pays out more than 80 percent of its sales back in prizes to its patrons, which wouldn't change. The remaining percentage is then taxed incrementally depending on how much the organizations do in sales for pulltabs and other select forms of gaming — from 9 to 36 percent for the top sellers. Whatever amount remains is then spent on lawful expenditures like charitable donations, building upkeep and expenses.

    The new legislation would only lower taxes on the money organizations donate to charitable causes.

    “What our charities are saying is we didn’t get involved to become a primary tax collector for the state,” Lund said. “We got involved to help our community.”

    Local gambling managers say the tax relief could be a major help, both in terms of allowing them to stay in the gaming business, and in how much more they’d be able to donate to their communities.

    John Lamm, gambling manager for the Lake Washington Improvement Association, said he’s reached out to area legislators in the hopes they’ll get on board with the legislation. None of the 23 representatives signed on as authors for the bill are local.

    Lamm said lowering the high tax rate — his organization is big enough to fall in the 36 percent rate — would be a step in the right direction.

    “I think more should be done than that, but this is a start,” he said. “What we’re paying them is phenomenal.”

    One of the biggest charitable gambling organizations in the state, the Mankato-based Community Charities of Minnesota, paid more than $65,000 in state taxes in January alone, according to gambling manager Mark Healy. Municipal taxes in some communities further cut into gross receipts.

    Healy said any dollar they don’t have to pay in taxes would be a dollar put toward community causes.

    “What’s unfortunate about this is we can get money to charities and needy people a lot quicker than the Legislature can,” he said.

    Jim Steiert, president of Mankato Area Hockey Association, said he knows exactly how the tax relief could help his organization. With youth hockey participation on the rise, the extra money could be put toward a capital campaign for a new ice sheet in Mankato.

    “Any tax relief would be welcome,” he said. “Whether it’s for charitable gambling or your personal tax return.”

    One roadblock for the tax relief is how it could impact funding for U.S. Bank Stadium. Charitable gambling has helped fund construction costs for the stadium since 2012.

    Speaking to the tax committees in recent weeks, the Minnesota Department of Revenue's Tax Policy Manager Paul Cumings said the relief could negatively impact stadium funding. The hit to the state's general fund could also be greater than estimated, he said.

    Lund said his organization has offered to work with the department of revenue to address the stadium funding issue before its potential inclusion in the omnibus tax bill.

    “It’s complicated and we have ideas on how to address that,” he said. “We’ve offered to work with the tax chairs and department of revenue.”


  • 20 Feb 2017 14:47 | Amanda Horner (Administrator)

    This article was written by Shannon Prather and originally appeared in the Star Tribune Feb. 20, 2017. View the original story here.

    Some nonprofits pay more in taxes on pulltabs, other gambling than they give out to community. 

    For every dollar raised through charitable gambling that the Irving Community Association gives to food shelves and children’s programs, it pays more than $2 in taxes.

    The Duluth-based nonprofit paid $733,000 in state taxes and fees last year, more than double the $306,000 it spent on good works, according to its gambling manager.

    Irving belongs to a group of nonprofits with gambling operations now asking state lawmakers for millions in tax relief to free up more revenue for charity.

    But the Minnesota Department of Revenue has expressed concern about losing dollars that go into the state’s general fund and help pay for U.S. Bank Stadium.

    The bill has passed through two House committees with bipartisan support, said Allen Lund, executive director of the trade group Allied Charities of Minnesota.

    “Our mission is to give back to the communities and take care of the children,” said Genny Hinnenkamp, charitable gambling manager for the Irving association. “But you wonder, is it worth just being a tax collector for the state?”

    Hinnenkamp, who testified in front of the House Taxes Committee last week, said some lawmakers seemed surprised that the tax bills for nonprofits were so much higher than the amount left for charity. She said it especially stings to be paying for U.S. Bank Stadium, a facility built primarily for professional athletes, while her nonprofit — which helps little leagues, youth hockey associations and after-school programs — has yet to replace its longtime headquarters, lost to Duluth’s 2012 floods.

    Minnesotans spent $1.5 billion on charitable gambling in fiscal year 2016, including pulltabs, bingo and meat raffles. More than 80 percent of that was paid out in prizes by 1,200 participating nonprofits.

    Overall, nonprofits that use gambling paid an estimated $60.6 million in state taxes and fees levied against their operations last year while directing $62 million to their charity work, which includes the support of veterans, youth sports and people with disabilities, according to the Minnesota Gambling Control Board’s annual report.

    Organizations are taxed on their gross receipts, minus prizes paid, at a progressive rate that ranges from 9 to 36 percent for pulltabs, tip boards and electronic link bingo. They’re taxed at a rate of 8.5 percent for other games.

    “The charities are fast approaching the point where they will be paying more to the state than they have for their communities’ needs and missions,” Lund told the Taxes Committee.

    The proposed law change would create a tax exemption for the money that nonprofits use for charitable missions. Nonprofits would still pay taxes on funds they use for operational costs.

    Lund said the proposed change would cut taxes by an estimated $16 million per year, shifting that money directly to charity work.

    But Paul Cummings, tax policy manager for the state Revenue Department, cautioned lawmakers that the cost of the proposed tax relief “could be significantly greater than $26 million” and affect the amount that goes to U.S. Bank Stadium.

    Lawmakers last changed the tax structure for charitable gambling in 2012 to help fund the construction of U.S. Bank Stadium. The first $37 million collected in taxes from charitable gambling is deposited into the general fund, with the balance going toward the funding of the stadium.

    “The elephant in the room is the 2012 stadium bill. We do not believe the intent of that legislation was to harm charitable gambling in Minnesota, but that is becoming the net effect of that bill,” Lund told the Taxes Committee.

    Rep. Diane Loeffler, DFL-Minneapolis, expressed some skepticism about changing tax laws and said she worries about the expansion of gambling, which can breed compulsive gambling issues.

    “It shows up in all kinds of social costs in our state budget,” she said.

    “This bill is not about the expansion of gambling,” Lund said. “This bill is about getting more money back to your communities where we address needs.”


  • 09 Feb 2017 06:28 | Allen Lund (Administrator)

    Audio of the committee hearing in the link below.  Representative Dettmer, myself, Nancy Immel from the Forest Lake Lions and Al Hauge of the Forest Lake Athletic Association are the testifiers.  We start at the 5 minute mark.

    http://ww2.house.leg.state.mn.us/audio/mp3ls90/com020817.mp3

  • 07 Feb 2017 08:54 | Allen Lund (Administrator)

    Members and Associates,

    This might be the most important thing you do this year on behalf of your charitable organization. Yes, what I'm asking of you is THAT important. On Wednesday, the Community Vitality Investment Act will receive its first legislative hearing. The bills (HF 226 in the House of Representatives and SF 419 in the Senate) would bring some fairness to how our charitable contributions are taxed.

    Right now, charitable gaming organizations are the only entities in the state that provide good and services and are NOT able to deduct donations from their taxable income. Think about that. Our organizations exist only to invest in making our communities safer and better places in which to live and work. Yet, we alone are singled out under the state's tax code and required to pay taxes on charitable contributions. Legislators need to hear directly from YOU and the beneficiaries of your charitable contributions. Send an email, make a phone call or write a letter to your legislators (you can find out who represents you here --  http://www.gis.leg.mn/iMaps/districts/ ) and let them know how vital this legislation is to your community's vitality. 

    Most importantly, let your legislator know what your organization does. Provide some examples of what your charitable contributions have meant to your community and the things that high taxes are preventing you from doing. Provide real-life examples.

    Here are some other facts to share:

    ·         Charities now pay more than $1 million a week in taxes to the state on their charitable gaming operations – nearly $56 million in Fiscal Year 2016.

    ·         The legislation does NOT change current tax rates on charitable gaming organizations – rates that now average about 22 percent and is up to 7 times higher than for-profit organizations.

    ·         The change in law proposed under the legislation would only affect taxes imposed on charitable contributions. If successful, the legislation would give charities about $16 million more to invest in their communities, based on FY 16 revenue and contributions. Let your legislators know what the tax

    It is essential that you contact your legislator today. Let him or her know how critical this legislation is savings could be invested in your community.  to your organization and your community. Be sure to reference the bill numbers (HF 226 when you are writing to a member of the House of Representatives and SF 419 when writing to a Senator. 


  • 12 Jan 2017 14:29 | Allen Lund (Administrator)

    Here is the House and Senate versions of the charitable gaming tax relief bill for the 2017 legislative session.

    HF0226.0.pdf

    2017SF0419.pdf

    We have our House file number and the Senate file number for the Community Vitality Investment Act. It is HF226.  This bill is a matter of fairness and common sense. It makes our donations exempt from the state gambling tax, giving us more to invest in our missions and our communities. 

    Contact your Representative and ask them to sign onto the bill.  In the House every Representative can sign onto a bill.  Contact your Senator and and ask them to support the bill.  In the Senate only six Senators can sign on to a bill.  ACM will cover that.  You can find out who represents you at http://www.gis.leg.mn/iMaps/districts/

    How important is it that you educate your legislators? Earlier this week, we sent the Star Tribune opinion article (http://www.startribune.com/charitable-gaming-bears-more-than-its-fair-tax-share-time-for-a-change/410456545/) to all members of the state legislature. We heard back from several members that they already knew about the legislation and wanted to co-sponsor it BECAUSE they heard from a charitable organization in their community. 

    We have a long way to go; we are hearing that there is a possibility that the legislature will pick up the tax bill from last session that did not get passed.  Tax relief for all charitable gaming was not in that bill.  We need to make sure that we are all in any tax bill passed this year.  And that won't happen if legislators don't hear from you. Your voice and your voice alone can provide legislators with the understanding they need of just how much you are doing for your communities and how valuable it would be to be able to make your contributions without also having to pay taxes on the donation. 

    Educate your Representative on the importance of charitable gaming in your community, what the extra dollars would mean to your community and what is not getting done in your community today because of the money you are sending into state government. 

    Regards,

    Al Lund


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