Allied Charities of Minnesota

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  • 18 Oct 2017 09:46 | Allen Lund (Administrator)

    Due to scheduled maintenance, our e-Services system and other online services will be unavailable from 9:30 p.m. on Thursday, November 9 until 11:30 p.m. on Sunday, November 12. This includes the telephone file and pay system. Regular deadlines for filing and paying your taxes still apply. Please plan accordingly. We apologize for the inconvenience.

  • 28 Aug 2017 11:43 | Amanda Horner (Administrator)

    This article was written by Delane Cleveland and originally appeared on CCX media on Aug. 25, 2017. View the original article and video here.

    At many American Legions and bars across Minnesota, the multi-colored assortment of pull tabs, along with the lure of big cash prizes, are an immediate draw. 

    In fact, fiscal year 2017, which ended June 30, was a record year.

    "We increased our sales by $194 million," said Al Lund, executive director of Allied Charities of Minnesota.

    Lund's organization represents all 1,200 of Minnesota's licensed gaming charities. 

    "As I am very fond of saying, we are good people doing great work," Lund said.

    What people may not realize is that examples of charitable gambling are everywhere. The electronic sign in Osseo along County Road 81, for instance, was funded in part, with $10,000 in charitable gambling money.

    "What we have done in this community is outstanding," said Bill Johnson, a member of Osseo's American Legion Post 172.

    Thanks to charitable gambling money, Johnson helped make the electronic sign in Osseo happen -- along with projects related to schools and veterans issues.

    "So we are a true asset to also our fellow veterans, but to our community as a whole," Johnson said.

    But industry experts are concerned because it looks like for the first time that the state will benefit more than the charities. As sales volume increases, so do the taxes.

    "The average charity in Minnesota realized $800 more for their communities and missions, the state realized $8,000 more on each of those charities," Lund said. "So it was basically a 1 to 10 split and we think that's very wrong."

    The reason for the discrepancy is the 2012 stadium bill passed by the state legislature, which changed the way the state taxes charitable gambling. The money raised by the state helps pay for U.S. Bank Stadium. In the meantime, charities take a hit. 

    "What's happening today is our groups are having to turn down more and more donations, or reduce the amount requested," Lund said.

    Now, people in the charitable gambling industry are making pleas to the legislature for a change. 

    "If we as a community say, 'we want this done' they will pay attention to our needs," Johnson said.

    Meanwhile, the Minnesota Gambling Control Board said final numbers for fiscal year 2017 won't be available until late November.

  • 18 Aug 2017 10:52 | Amanda Horner (Administrator)

    This article was produced by Roxanne Elias and originally appeared on KAAL on Aug. 17. View the original story here.

    (ABC 6 News) -- Local organizations are coming together to figure out what the future holds for charitable gaming.

    Rod Toomey with the Rochester Eagles Club said all your money may not being going where you think, and he wants to see that change.

    "I don't think a lot of people really understand the significant amount of dollars that are going to the state," said Toomey.

    Right now, the way things work is the more money that's made, the higher the revenue is taxed.

    With expenses, organizations may collect as little as 28% of each dollar.

    Joe Brown, Commander at Rochester's American Legion Post 92, also said it's taking away from those who think they are doing good.

    "Our combined receipt taxes and everything that, throughout the year, what we send up north is, is more than actually what we give to our, our charities."

    "Actually the community is the one that comes in here and buys the pull tabs, come in for the bingo. It's their money you know and they would probably, they would rather like our patrols keep the money here,” added Brown.

    And that's why on Thursday, both organizations met with the Allied Charities of Minnesota to discuss what needs to be done next.

    "The hard part for me is when we're paying the state before we have money to give out to charities and that's, that's I think why people pull tabs and play bingo is they know it's for a worthy cause," said Toomey.

    Both organizations say they just want the state to update the way the system works, so the community can have peace of mind that their funds are going to the right place.

    "In the end, it just leaves more money that we as charities can give away," said Toomey.

    Both organizations also say they don't mind paying the taxes but they would like for the amount to be lower to keep more money going to charity.



  • 15 Aug 2017 10:42 | Amanda Horner (Administrator)

    This article was written by Haydee Clotter and originally appeared on Lakeland Public Television on Aug. 15, 2017. View the original article here.

    $1.7 billion: that’s how much Minnesotans spent on gambling last year. Allied Charities of Minnesota (ACM) represents the 1,200 licensed charitable organizations in the state. They invited local organizations to the Bemidji Eagles Club to examine the future of charitable gaming.

    “Just to see what’s on their minds, talk about the issues we feel are important and just to get a sense on what we need to be working for, especially looking towards the 2018 legislative session,” said Allied Charities of Minnesota Executive Director Allen Lund.

    ACM is holding 12 sessions around the state where they spark a conversation focusing on the what local charities are dealing with. There seems to be a growing consensus on one issue.

    “Taxes and the increase that is going to the state, which turns into less money for us for our missions and our communities,” said Lund.

    Lund says this would indicate that charitable organizations are becoming tax collectors for the state and that’s what ACM wants to avoid. Nothing is set in stone and must go through the state legislature first, and there’s something you can do about it now.

    “Contact our legislators and let them know how important this is and the issues that confront the local communities,” said Lund. “The needs in our local communities are growing and we want to be able to meet those. We believe the people that raise the money know best where that money should go.”

    For the 2016 fiscal year, pull tabs were pretty popular and brought in nearly $1.5 billion in sales. The proceeds from lawful gambling are used for anything ranging from youth activities to the support of non-licensed veterans’ clubs.

    “Our business grew by 1-2 percent, while the state’s business, their take, grew from high teens to low twenties,” said Lund. “So on an increase of $194 million in sales, we netted $1 million. That’s a grave concern to us.”

    It’s a requirement for a majority of organizations to spend at least 30 percent of their net profits on lawful purposes and that includes taxes.



  • 14 Aug 2017 14:13 | Amanda Horner (Administrator)

    This article was written by Shannon Prather and originally appeared in the Star Tribune on Aug. 12, 2017. View the original article here. 

    Taxes and fees could take such a big chunk out of charitable gambling this year, according to the trade group for nonprofits that run those operations, that they might eclipse the proceeds left for charity — even though Minnesotans spent a record $1.7 billion on gambling last year.

    “We are now tax collectors for the state instead of workers for our communities,” said Al Lund, executive director of the trade group Allied Charities of Minnesota, who has written a mock obituary for the industry.

    But tax relief could come at the cost of slowing payment on the state’s $348 million share of the $1.1 billion U.S. Bank Stadium.

    Preliminary numbers show a 12 percent hike in money spent on pulltabs and other bar games for the fiscal year ending June 30. That makes seven straight years of dramatic increases, said Tom Barrett, executive director of the Minnesota Gambling Control Board.

    “The market has been good, things like gas prices are relatively low and the Twins are winning. When sports teams do well, people are out at bars celebrating,” Barrett said.

    Most of that money, about $1.45 billion, was paid out in prizes. Of the $277 million left, about half goes to operating expenses and the rest goes to taxes, fees and charities ranging from veterans organizations to youth hockey to church missions.

    Nonprofits are offering a larger variety of games and “the charities are doing a better job promoting where the money goes,” Barrett said.

    Exactly where that money goes, however, is a major point of contention for the nonprofits running the games.

    In 2016, after operating expenses were taken out, 49 percent of what was left from gambling proceeds — $61.7 million — went to a variety of taxes and fees. Charity got 51 percent of the proceeds, or $64.3 million, Lund said.

    He believes this year will be the tipping point when more will be paid out in taxes and fees than for good works.

    The Minnesota Gambling Control Board said final numbers for fiscal year 2017 won’t be available until late November. “With record sales and record prizes, we expect to see the highest amount of taxes paid. We know taxes are part of the industry, but we don’t take a position on it,” Barrett said.

    Lund penned the mock obit for charitable gambling this summer. “Born in 1945 to raise funds for church and community needs by conducting bingo, mostly in church basements and at county fairs, it culminated in 2017 with the strangling of the golden goose,” he wrote.

    There were two contributing factors, the obit continued: “the 2012 stadium bill that made millionaire professional football team owners into billionaire professional football team owners at the expense of Minnesota communities and a seemingly insatiable appetite by the state for increased tax revenue at the expense of community-based nonprofit groups.”

    Stadium ‘a bad taste’

    State lawmakers changed the way they tax charitable gambling in 2012, partly to help pay for U.S. Bank Stadium.

    They introduced a progressive tax structure, ranging from 9 to 36 percent. The first $36.9 million collected is deposited into the general fund, per state statute, with the remaining millions going toward paying off the state’s share of the stadium.

    At a legislative committee meeting earlier this year, Paul Cumings, tax policy manager for the Revenue Department, cautioned lawmakers that the cost of the proposed tax relief could significantly affect the amount of money left to pay for the stadium.

    “We understand we have to pay taxes, but we pay above and beyond what any other businesses pay. There is no other company that pays 36 percent taxes and doesn’t get to exclude expenses,” said Corey Rasmussen, assistant gambling manager for the Spring Lake Park Lions.

    “We are paying for the stadium. That puts a bad taste in everybody’s mouth.”

    Nonprofits pay sales taxes and state regulatory fees on the paper products used in gambling, including bingo cards and pulltabs. Cities and counties can charge a regulatory fee and, in addition, municipalities can take another 10 percent of net profits to fund local government operations.

    All those taxes and fees cut into the amount collected for the charities, Lund said.

    Many individual charities already pay more in taxes and fees than they collect for their work. For instance, the Spring Lake Park Lions paid $439,000 in taxes and fees and had $156,000 left for charity.

    The Lions club, which has a handful of gambling sites in Spring Lake Park and Blaine, gives its money to local school districts, food shelves and charities such as Hope For Youth for homeless teens and young adults.

    Of the 1,200 nonprofits that run charitable gambling, the top 93 pay half the taxes, according to the Minnesota Gambling Control Board.

    An effort to change the law stalled last year at the Legislature. At a hearing earlier this year, Rep. Diane Loeffler, DFL-Minneapolis, expressed skepticism about changing tax laws and said she worried about the expansion of gambling, which can breed compulsive gambling issues.

    “It shows up in all kinds of social costs in our state budget,” she said.

    Lund said they’ll try again this year, even as Minneapolis prepares to host a Super Bowl in early 2018 — at U.S. Bank Stadium.



  • 10 Aug 2017 13:41 | Amanda Horner (Administrator)

    This article was written by Heather J. Carlson and originally appeared in the Rochester Post Bulletin on Aug. 9, 2017. View the original article here.

    As gambling manager of Rochester Juvenile Hockey Association, Mark Hickey has watched as state taxes continue to take a bigger bite out of the charity's profits.

    In fact, the group spends far more on taxes than it does on its charitable mission, which includes helping pay for the Graham 4 hockey arena. From July 1, 2016, to June 30, 2017, the nonprofit donated $178,000 raised from paper and electronic pull-tabs. It paid out $461,000 in state taxes.

    "We're just trying to do our part, but the taxes are overwhelming," said Hickey, who also serves on the Rochester City Council.

    Charitable gambling groups are sounding the alarm over what they see as an unfair tax system. Allied Charities Executive Director Al Lund went so far as to pen a tongue-in-cheek obituary for charitable gambling in the state, writing "charitable gambling will now be known as The State of Minnesota Charity. Details are yet to be worked out, but beneficiaries of past charitable donations will need to go to St. Paul to ask for help."

    Lund said that based on preliminary estimates he expects Minnesota charitable gambling groups in 2017 will — for the first time — pay more in state taxes than they donate to their causes.

    "What I keep telling the Legislature is you are strangling the goose," Lund said. "At some point, the groups are going to say en masse, 'We're done.'"

    Allied Charities has organized meetings across the state to talk about the issue, including one at 5:30 p.m. Aug. 17 at American Legion Post No. 92 in Rochester. The group wants state law changed so organizations' charitable donations are no longer taxed.

    Sen. Carla Nelson, R-Rochester, is sponsoring a bill to do just that. She said it is time that these groups raising money for local charities get some tax relief.

    "It's not fair. That's the only business in our state that has to pay taxes on its charitable donations," she said.

    A tough sell with a big price tag

    But efforts to pass the bill stalled last session, despite bipartisan support. One major reason is the bill's cost. The Minnesota Department of Revenue estimates the charitable tax exemption would cost the state upwards of $28 million per year. House Taxes Committee Chairman Greg Davids said there is another roadblock charities face in convincing lawmakers to get on board.

    "There are some folks that say, 'This is supposed to be a revenue raiser for the state,'" Davids said.

    The Preston Republican lawmaker wants to see charitable gambling taxes lowered, but said it has been a tough sell in St. Paul.

    Too soon to know

    So will charitable gambling groups have paid out more in state taxes than donations in fiscal year 2017? Gary Danger, a compliance officer with the Minnesota Gambling Control Board, said it is too early to know for sure. Final numbers will not be available until October or November.

    "We know that sales far exceed anything that we've seen in 30 years. But there's a lot of other things that have to be factored in yet before we can find out the rest of the story," Danger said.

    Preliminary numbers show charitable gambling groups had sales of $1.72 billion for fiscal year 2017. That's up from $1.5 billion the year before. Of that money, more than 83 percent was paid out in prize money. So far, Danger said he hasn't seen a drop in the number of groups doing charitable gambling. It has held fairly steady at about 1,100.

    'Hurting the charities'

    Roughly 92 percent of all charitable gambling in the state is in the form of paper or electronic pull tabs. In 2012, lawmakers overhauled the state's charitable tax system to help pay for the Minnesota Vikings stadium. Under state law, charities pay taxes on money raised minus prizes paid — called net receipts. The tax rate climbs as profits' net receipts increase from a low of 9 percent to a high of 36 percent. All tax revenues above $36.9 million are automatically deposited into the stadium reserve fund.

    Rod Toomey, gambling manager for the Rochester Eagles Club, said it's frustrating to see more and more money going to the state for taxes. In fiscal year 2016, the club donated $61,100 to charities but paid nearly twice that amount in taxes. Luckily for the Eagles, sales have continued to climb. But Toomey worries what happens if sales stagnate or decline.

    "At some point, this unfair tax structure is really hurting the charities," Toomey said.

    As for Hickey, he said he would be happy to see any sort of a tax break to enable charities to donate more. Even dropping the top tax rate from 36 percent to 27 percent would be a big help.

    He added, "It would just really help our bottom line. We'd have more money to contribute to our charitable purpose."





  • 10 Aug 2017 10:12 | Amanda Horner (Administrator)

    This story originally ran on Aug. 9, 2017 on Fox 21. View the original story and video here. 

    Each year billions of dollars are spent on charitable gaming across the state of Minnesota. Sounds like a lot of money, but with increasing state taxes on gaming and the states percentages getting bigger and bigger. What’s left over for the charities that rely on their slice of the pie?

    Nonprofits across Minnesota including Duluth are feeling the squeeze when it comes to millions of dollars being distributed for local charities. During the fiscal year of 2016, gamblers in Minnesota spent 1.5 billion dollars on different gambling games.

    After payouts or winnings of nearly 1.27 billion and after taxes from the state and other expenses, only 70 million dollars was left over for all nonprofits across the state of Minnesota.

    The state raked in 55.8 million. 37 million going into the general fund and 18 million going towards Vikings home field U.S. bank stadium. Nonprofits are saying when is enough, enough?

    “At the end of the day the charities only realized one million dollars more for their missions. Whereas we payed 11 million dollars more in taxes. So basically at the end of the day we sat down with the state and they said you get one and we get 11 have a nice day,” Allen Lund, Executive Director, Allied Charities of MN said.

    The Irving Community Center and American Legion both are licensed in the state to have onsite gambling, such as pull tabs, bingo, raffles and other games included.

    Wednesday Fox 21 was at the American Legion Post 71 for a meeting hosted by allied charities of Minnesota. There they wanted to talk about how to propose a bill to regulate how much the state would be able to occur.

    “If they were to adopt our suggestion to cap it at 25%, it would still be 5 times what the corporate tax rate is. We’re saying, isn’t that enough? Is that enough for what you need from us? Our needs in our community are growing at a tremendous clip and we need and want to be able to serve those needs,” Lund said.

    Lund also stated that the numbers have grown over the fiscal year 2017 up to 1.7 billion dollars spent on the games.

    Lund tells Fox 21 that this year, according to his projections. For the first time ever the state of Minnesota will collect more money off of gambling taxes than the charities will because of the tax regulations currently in place.


  • 09 Aug 2017 10:34 | Amanda Horner (Administrator)

    It has come to our attention that Pilot Games is starting an organization to compete with ACM that will be more “electronics friendly”.

    ACM is a primary reason that electronics are available for play in Minnesota today. ACM has supported electronics as a tool. What we do not support is making less revenue on electronic pull tabs than we make on paper pull tabs.  We also do not support not having choices when it comes to payout, which Pilot does not offer as all of their games are at 85% payout. 

    Currently the average net for paper pull tabs is right at 4 cents per dollar sold.  That number has declined over the past several years as our payout average, cost of doing business and overall tax rate have all increased.  The average net for electronic pull tabs is currently less than 3 cents per dollar sold.  That is if your payout is at exactly 85%, which over time will not happen with an 85% game, whether paper or electronic they will pay out more than 85%. 

    Mr. Weaver has told me personally that if we could play 90% games that we would have more money than we know what to do with.  He cites Las Vegas as the example of how to run a gambling organization.  While I admit to not fully understanding how Las Vegas gambling works, I do know how charitable gaming in Minnesota works and I disagree with that statement.  With our cost and tax structure playing all 85% games is a prescription for going out of business, playing 90% games would only accelerate that.   

    ACM asked Pilot Games to offer less than 85% games and to lower their 31% revenue share.  They have declined to do either of those. We are now faced with going to the legislature to affect those changes.

    One has to wonder about the motives of for profit companies starting and funding an organization that is purported to represent charities.   I would tell them that two immediate changes that they can make are to lower their fees and make less than 85% games.  Those two changes alone would be of huge benefit to charities, their communities and missions.

    I am told that Pilot Games tells prospective customers that they will make 17% on their electronic tabs.  The question that needs to be asked is 17% of what? 15 cents on a dollar wagered (85% payout) equates to a net 2.5 cents, 10 cents (90 percent payout) equates to a net 1.7 cents.

    Here is a perfect example of what I am talking about and what is so wrong with our current situation.  In FY2017 our sales increased by $194 million.  Out of that $194 million we increased our bottom line funds for our communities and missions by $1 million.  Our return was one half of one percent.  The state on the other hand increased their bottom line by close to $11 million.  Their return was five percent.  Their return was ten times greater than ours.  Why?  Because of our payout percentage, cost structure and tax structure. 

    Our payout percentage, cost structure and tax structure are providing too little reward on our work and risk.  We did all of the work and took all of the risk, but received only a pittance of the reward.  Electronic pull tabs played a part in this.  One is left to wonder what Pilot Games return on investment was and how that compared to ours. 

    I have been told that charities should be accepting of making less on electronic pull tabs as there is less work to do.  We do not agree with that.  There is less work to do than paper pull tabs, but there is still work to do and we are supposed to be about making money for our communities and missions, not about making manufacturers or the state rich. 

    ACM believes that every charity has the right to decide what tools they choose to use.  We will never accept a mandate to use any tool and we encourage every charity to fully understand what they are netting on every tool that they choose to use.  We will never support bars having electronics without a charity.  We have lost sight of what charitable gaming is supposed to be about and that is becoming more evident every day.  Use Pilot Games, don’t use Pilot Games, but do it with your eyes wide open.

    Regards,

    Al


  • 31 Jul 2017 10:20 | Allen Lund (Administrator)

    We streamlined the annual certified inventory process for lawful gambling organizations to simplify reporting and reduce paperwork for you.

    The updated process is effective July 31, 2017.

    More time to conduct your annual inventory

    To provide more flexibility, you now have more time – up to 30 days after your fiscal year ends – to conduct and submit the annual certified inventory and cash count. You are no longer required to conduct the annual certified inventory and cash count at the close of business on the last day of the organization’s fiscal year or before the start of business on the first day of the new fiscal year.

    Fewer forms to fill out

    To reduce and simplify paperwork, we:

    • Eliminated the Annual Certified Cash Count by Site (Form CC).
      • You no longer need to audit games in play to reconcile start banks.
    • Condensed the Annual Certified Physical Inventory and Cash Count Summary (Form CI).
      • List the total cash count for each site. You no longer need to report the total dollar value of ending inventory.
    • Revised sections of the Annual Certified Physical Inventory and Cash Count Summary by Site (Form INV).
      • List the total cash count for all forms of gambling.
      • List all pull-tab, tipboard, raffle board, and paddlewheel games in your possession, including those in play. You no longer need to report the dollar value for each game (including paper bingo and raffles).
      • If your organization conducts paper bingo, you now submit the Physical Inventory/Bingo Paper Monthly Summary (Form LG903) for each site.

    New forms available on website

    If your fiscal year ends July 31 or later, you must use our updated forms (below) to report the annual inventory and cash count summary.

    For more information, see the Lawful Gambling Tax Instruction booklet.

    Questions?

    If you have questions, contact the Lawful Gambling Tax Unit at 651-297-1772 or lawfulgambling.taxes@state.mn.us.



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