Philanthropy & Tax Treatment of Nonprofits in Minnesota

The arts are flourishing in Minnesota, but arts organizations are not without challenges. Even in the best of times, economic uncertainty is a basic condition of the arts. Minnesota exempts nonprofits from sales tax on tickets, purchases and property taxes, primarily because nonprofits provide services that are encouraged by the state and supported by philanthropic contributions. Most of a nonprofit’s services are provided by funds that are a mix of earned income and individual, foundation, corporate, state and federal contributions. Taxation of nonprofit philanthropic activity is against the state’s interest because it takes away from the very services the nonprofits are performing for the public, and from the money that others have donated to those services. In some cases it would mean the difference between the survival or elimination of a community asset.