Distinguishing Community Benefits: Tax Exemption Versus Organizational Legitimacy

Byrd, James D.; Landry, Amy Yarbrough

doi:10.1097/00115514-201201000-00011

Cited by 5 publications

(3 citation statements)

References 14 publications

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“…Expectedly, tax-exempt nonprofits tend to turn their attention to contingent symbolic management (Zott & Huy, 2007) and unquantifiable activities that only contribute to legitimacy (Byrd & Landry, 2012); e.g., unilateral website disclosures (Tremblay-Boire & Prakash, 2015). Bromley and Orchard (2016) show that in those circumstances, tax-exempt nonprofits tend to focus on codes of practice that symbolize their commitment to accountability and self-regulation, thus signaling their legitimacy.…”

Section: Condition 2: Nonprofit Management and Governance Distractionmentioning

confidence: 99%

When Tax-Exempt Nonprofits Detract Value from Society

Gamble

Muñoz

2022

AMP

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Nonprofits receive tax exemptions in return for social value creation and delivery. While the outcomes of these tax exemptions are often positive, there are value detracting situations in which the cost of granting the tax exemption is likely to exceed its benefits. To date, explanations for these value detracting situations remain scattered and discipline centric.Therefore, the purpose of this paper is to clarify the conditions under which tax-exempt nonprofits detract value from society. We survey fifteen years of tax-exempt nonprofit scholarship, across nine disciplines, and identify three value detracting conditions: policymaking and regulation intemperance, nonprofit management and governance distraction, and detection and prosecution inconsistencies. These three conditions interact and reinforce each other, compounding the value destruction to society. Overall, our findings offer important policy insights regarding the unintended consequences of tax exemptions and our framework can be used to identify negative return situations.

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Section: Condition 2: Nonprofit Management and Governance Distractionmentioning

confidence: 99%

When Tax-Exempt Nonprofits Detract Value from Society

Gamble

Muñoz

2022

AMP

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“…They do this so that their constituent base rewards them with approval. In this case, the conferred legitimacy translates into further donations, income, political support, and societal admiration (Byrd & Landry, 2012). Tax-exempt social enterprises have developed extremely powerful and legitimized brands for themselves.…”

Section: Ambiguous Signalingmentioning

confidence: 99%

How tax incentives slow down positive change in social impact ecosystems and what can we do about it

Gamble

Muñoz

2021

Journal of Business Venturing Insights

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“…Previous research has identified the unique and important services that are provided by NFP hospitals (GAO, 2005; Song, Lee, Alexander, & Seiber, 2013) and attempted to contextualize CB activities by presenting these activities as a percentage of a hospital’s net revenue or operating expenses (Gray & Schlesinger, 2009b). Young et al (2013) investigated factors that are associated with the provision of CBs, while other scholars have called for a more expansive definition of CBs (Byrd & Landry, 2012; Gray & Schlesinger, 2009b; Japsen, 2011) or have suggested that NFP hospitals manage their CB activities to coincide with earnings in an effort to minimize scrutiny (Vansant, 2011).…”

Section: Existing Literaturementioning

confidence: 99%

What Should We Expect? A Comparison of the Community Benefit and Projected Government Support of Maryland Hospitals

et al. 2015

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Designation as a tax-exempt, not-for-profit entity carries with it specific tax benefits. In exchange for tax exemptions, not-for-profit entities are expected to provide benefits to their communities. To evaluate whether hospitals provide community benefits (CBs) equivalent to the financial subsidies and advantages extended to them, tax liabilities and financial support were projected for all Maryland acute care hospitals between 2010 and 2012 and in the aggregate over the 3 years of this study. A comparison was then made between the provision of CBs and the financial support that governments provide to the hospitals. The results indicate that hospitals provide significantly and substantially more CBs than the material financial support they receive. Even after modeling changes in CB activities and the associated tax liabilities that may result from transitioning to taxable status, the benefits that hospitals provide to the communities they serve continue to exceed the potential government tax revenues.

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Distinguishing Community Benefits: Tax Exemption Versus Organizational Legitimacy

Cited by 5 publications

References 14 publications

When Tax-Exempt Nonprofits Detract Value from Society

When Tax-Exempt Nonprofits Detract Value from Society

How tax incentives slow down positive change in social impact ecosystems and what can we do about it

What Should We Expect? A Comparison of the Community Benefit and Projected Government Support of Maryland Hospitals

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