There are at least 60,000 nonprofit 501(c)(3) organizations operating in Pennsylvania. Each organization – from the smallest community-based charity to the largest nationally-established groups – had to get their start somewhere. Often, they begin when a few people who wanted to help their communities go about making that dream into a reality. One of the ways Pennsylvania supports nonprofits for the great work they do is by offering an exemption from the sales and use tax on many of the items and supplies needed to provide their charitable purpose.

But for nonprofits that are just getting started, it may be hard to prove that they meet one of the five criteria to be considered an institution of purely public charity – that they are donating or rendering gratuitously a substantial portion of their services. The Department of Revenue has no choice but to deny sales tax exemptions for these new nonprofits that would otherwise qualify, which frequently results in appeals.

That is why we will soon introduce legislation that offers a temporary sales and use tax exemption for these newer organizations. There are clawback provisions in place in case one of these organizations later fails to meet the qualifications for a standard 5-year exemption.

With this legislation, we can help new charities and reduce burdensome tax appeals by stopping the problem before it starts. Please join us in taking this important step in making government work better for those who are working for our communities.