Taxing Maine’s nonprofits is a hot topic in media and government circles. Gov. Paul LePage has declared nonprofits are “takers, not givers” in their communities, while in the same breath stating that they “provide valuable services.” Legislators quickly defend their local nonprofits, while acknowledging the need for more revenues for cities and towns from these same organizations.

Specific proposals include LePage’s plan requiring municipalities to collect tax on nonprofit properties ,which would make Maine the first in the nation to do so. His tax package also cancels deductions for charitable contributions and broadens sales tax to a number of new services, affecting such nonprofits as museums, historical sites and summer camps.

Some legislators propose bills to require more extensive service payments by nonprofits or permit fire districts to charge fees for coverage in their areas. Some write opinion columns questioning the use of public funds by nonprofit organizations. Others demand more transparency among organizations receiving public funds.

Where did this nonprofit sector come from and why is it so prominent in Maine? And what is the sector’s relationship to government?

Before going any further, I will note that I serve on the board of the Maine Association of Nonprofits, chair its Advocacy Committee and work for a foundation that (like other foundations) depends upon nonprofits to carry out the work that we fund.

The development of nonprofits in Maine is closely related to our historical and cultural view of government that emerged from colonial times. New England states value governance that is close to the people, hence the emergence of villages and towns as the central units of government. In fact, some localities had laws that no resident could live more than a mile from the center of the village.


Contrast this with larger colonies, such as Virginia or the Carolinas. Settlers and farms were distributed over a vast area. Those states adopted the English concept of the county — a unit of government organized to span broad distances. Later, as even larger western states were added to the United States, the importance of strong county structures grew.

Over time, county governments evolved in complexity and scope, from early roles in police protection, jails and courts to such functions as highways, public health, welfare services, sewage, garbage and regional planning. While Maine did develop counties, the functions were limited and the dominance of municipal government remained.

Maine’s villages and towns, however, did not have the resources to provide many services. That’s where nonprofits came in. Since colonial times, churches, universities, hospitals, granges and private schools in New England have provided needed educational, social and health services in small communities. The late 1800s and early 1900s saw further growth in the nonprofit landscape with the appearance of YMCAs, Boys and Girls Clubs, Goodwill, Community Chests and others.

Fast forward to the 1960s, when we saw tremendous growth in nonprofits nationally and in Maine. The War on Poverty provided large grants to states and local governments that contracted with nonprofits for services. Eventually, the federal government contracted directly with local nonprofits and the numbers of organizations grew.

We witnessed a huge shift in the mental health system at that time as well. Many states followed Ronald Reagan’s lead in California and closed large, often antiquated, psychiatric institutions, sending the residents out to communities for care. National legislation established community mental health centers but there were never enough to meet the need. Eventually, many county governments stepped in to provide care and some even opened hospitals.

Maine saw its own institutional watershed. Because of legal action in 1975, hundreds of Pineland residents with developmental disabilities were moved out into the community and the institution finally closed in 1996. In 1990, the Augusta Mental Health Institute became legally accountable for setting up a community-based system of care. Many agencies and residential homes sprung up following those decrees to enable former institutional residents to live productive lives in their communities.

The theme emerging here is that many nonprofit organizations were formed to perform the work of government, especially in New England, where county government is not prominent. In fact, three New England states appear in the top 10 for proportional numbers of nonprofits.

The nonprofit sector has largely emerged from Maine’s propensity for smallness. By choosing to limit the scope of local government, we have encouraged a broad system of nonprofits to fill gaps. Let’s therefore embrace their important role in our small communities and facilitate, rather than constrain, their work on our behalf.

Lisa Miller, of Somerville, is a former legislator who served on the Health and Human Services and Appropriations and Financial Affairs committees.

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