Controversial Ohio Tax on Nonprofit Orgs

Ohio House Bill 540 is proposing the imposition of payments in lieu of taxes (or “pilots”) on land conservation organizations with significant property holdings currently not subject to real estate taxation. The bill would specifically target large nonprofit conservation groups owning more than 15,000 acres in a single county. Beginning in 2026, these organizations would owe 2.5% of the taxable value of their land, with proceeds going to local governments.

One nonprofit directly affected by the potential pilot is The Nature Conservancy, which owns approximately 20,000 acres in two townships. If enacted, the pilot would amount to between $230,000 and $275,000 annually. This would be a substantial burden as the nonprofit’s land holdings do not ordinarily yield annual rents or other revenue.

But a far more significant question looms–if this pilot project is enacted, could it broaden the opportunity for the state and local governments to tax other nonprofit organizations including museums, hospitals, universities, and religious organizations who have traditionally benefitted from property tax exemptions? And, unlike land conservation organizations, these nonprofits generate revenue from their property, making them far more capable of absorbing the cost of pilots.

If enacted, an obvious benefit accrues to local governments in dire need of new tax revenue. But opening the door even a crack to permit property taxation of land conservancies could lead to a sea change in how Ohio and potentially other state and local governments tax nonprofits.