This article originally ran in Duluth News Tribune on July 21, 2017. View the original article here.
Charitable gaming in Minnesota is still limping along, but its obituary was written this week anyway after the fiscal year ended and the disappointing numbers could be considered.
It isn't that Minnesotans are giving less to worthy causes. It's that the state's taxes on raffles, bingo, and the sales of pull tabs are now totaling more than the proceeds that are able to be contributed to Little League neighborhood baseball, scholarships, police dogs, local zoos, youth football, food shelves, and other good causes. Charitable gaming has been supporting such things in Minnesota for more than seven decades, ever since 1945.
"And this was the first year more was paid in taxes to the state than was able to be donated to the local causes," Amanda Horner, the administrator of Allied Charities of Minnesota, which oversees the state's 1,200 charitable nonprofits, said in an interview Wednesday with the News Tribune Opinion page.
Those nonprofits include the Irving Community Club in West Duluth, which serves as a great example of what's happening with state taxes on charitable gaming as high as 36 percent. Irving's profits from pull tabs and other gaming last year totaled a little more than $1 million. Of that, $733,000 — a whopping 72 percent — went to the state's coffers in St. Paul in taxes and fees. Just $306,000 was able to be doled out to support and to help pay for community wants and needs. Put another way, for every $1 Irving used to support kids and neighborhoods, it paid more than $2 to the state in taxes and fees.
"We are tax collectors for the state of Minnesota," Irving Community Club's Genny Hinnenkamp said in an interview in May with the News Tribune Editorial Board. "That's practically all we are."
It isn't right. It's upside down. Taxing charitable donations at such levels is just cold.
"It's really sad," Hinnenkamp said. "The government is that greedy that they take away from the children."
Most lawmakers agree — verbally and publicly anyway. But legislatively? A request this past session to stop taxing the money charitable nonprofits distribute to schools, youth-serving organizations, T-ball teams, and others in real need went nowhere. The charitable organizations argued to lawmakers that they'd be happy to continue paying state taxes on pull-tab sales, the paper used to produce pull tabs, the wages paid to pull-tab operators and others, and more. But do their charitable contributions really have to be taxed, too?
The bottom line for a majority of elected state leaders proved to be the bottom line: Charitable gaming produces big bucks for the state, including for the new Minnesota Vikings stadium. With hardly anyone other than the charitable nonprofits and their association screaming for change, why mess with a lucrative and politically painless funding source?
Charitable gaming's obituary was shared by Horner with the News Tribune Opinion page after being written by Allied Charities Executive Director Al Lund.
"In fiscal year 2017, sales were up 12 (percent), but taxes were up 16 (percent)," Lund lamented, calling the situation "the strangling of the golden goose."
"It was a good run," he wrote at alliedcharitiesmn.org. "Charitable gaming will now be known as The State of MN Charity. Details are yet to be worked out, but beneficiaries of past charitable donations will need to go to St. Paul to ask for help. In lieu of flowers, relatives ask that you not send any money to the state."
And don't rest in peace — not until this taxing situation can be made rightside up again.