Just because a business runs as a nonprofit, does not mean it is exempt from legal confrontations. Recently, there are many nonprofits finding themselves in Chicago courtrooms engaging in battles that promise to shape the future for others in the nonprofit sector. There are several cases which have made their way to Chicago’s courts that will have outcomes affecting nonprofits for years to come. Here are three such cases.
Illinois Supreme Courts and Hospital Property Taxes
The battle over whether or not non-for-profit hospitals in Illinois should pay property taxes raged for some time. Lower courts had declared exempting hospitals from paying property taxes as unconstitutional. The argument was of course, that hospitals are “cash rich” even though they are considered not-for-profit and should have to pay property taxes for the betterment of the communities in which they are located.
Most of the 156 hospitals in Illinois are nonprofit including three in the Chicago area: Rush University Medical Center, Northwestern Memorial Hospital, and Advocate Health Care. In Illinois, nonprofit hospitals are exempt from taxes if the value of the charitable services they provide is at least equal to its approximate tax liability. The final ruling may affect nonprofits in Chicago and beyond.
Chicago Nonprofit Sues the Obama Foundation
Protect Our Parks, Inc. is a Chicago nonprofit which recently filed suit in the US District Court. The group alleges former President Obama pulled a “bait and switch” when they replaced the plans for a traditional presidential library with a complex that only grants digital access to his archival documents.
According to the suit, the proposed land near Jackson Park is public land, and private use is prohibited by law. Using it as a private entity as proposed by the Obama Foundation would violate the Chicago Park District Code. The foundation admits it is creating more of a community hub than a traditional library, but they hope it would house a new branch of the Chicago Public Library as well as other publicly accessible areas. The community will wait to see what the law allows and if the court findings will bring changes to the laws.
Nonprofits Sue the State
The fiscal deficit in Illinois has reached $11 billion. Nonprofits located in Chicago and other areas must deliver the services they have promised and then wait months on end before being compensated by the state. Presently, dozens of nonprofit organizations, mostly those providing social services, have stepped up their legal battle. Nonprofit groups that assist victims of sexual assault, the elderly, abused children and the homeless have filed not just one, but a second suit against the state due to the failure to honor its contracts.
The organizations claim the State of Illinois owes them more than $160 million collectively and due to untimely payments, there has been “irreparable injury.” They have faced many program cuts and layoffs due to inadequate funds caused by the state’s failure to pay its obligations. Interestingly enough, one of the organizations that have joined to sue the state is the Ounce of Prevention Fund directed by the governor’s wife, Diana Rauner.
