Many Pittsburgh officials and residents have long argued that the city’s financial health requires bigger contributions from tax-exempt organizations, a group headlined by UPMC, Highmark and major universities.
Multiple mayors have sought more commitments from the organizations with little to no success. But a change in the city’s approach after Mayor Corey O’Connor took office in January yielded some movement: UPMC gifted the city $10 million to buy new ambulances.
It’s a one-time gift, not an annual payment in lieu of tax (PILOT) agreement like those other cities have achieved. But UPMC CEO Leslie Davis said during a late-January press conference that she hopes the gift will be a “catalyst for broader collaboration among other civic, nonprofit and private sector partners.”
Public Source contacted each of the next four largest owners of tax-exempt property in the city — Highmark/AHN, the University of Pittsburgh, Carnegie Mellon University and Duquesne University. None of the organizations said they are planning to unveil a new monetary contribution to the city. Duquesne did not reply to the inquiry.
State law exempts nonprofits that meet certain criteria from paying property taxes. Property tax comprises about a quarter of Pittsburgh’s operating revenue, and as exempt nonprofits have amassed large amounts of city property over decades, pressure has mounted on city leadership to secure compensation in lieu of taxes from the organizations.
Dan Laurent, the chief communications officer for Highmark Health, said his organization is “actively engaged” with the new administration on how Highmark can “collaborate and collectively address the community’s health needs.”
Pitt spokesperson Jared Stonesifer said in an email that Pitt is already a major contributor to the city’s economy.
“We look forward to continuing to work together with the city to support and advance our region,” Stonesifer said.
CMU spokesperson Chuck Carney said the university has a “strong and positive working relationship with the new administration … We remain committed to contributing our strengths and expertise in ways that support the city’s continued growth and prosperity.”
Dozens of cities have agreements already in place, including nearby Erie and Altoona, and other education and medicine hubs like Boston and Providence.
Adam Langley, the associate director of tax policy at the Lincoln Institute of Land Policy, said pursuing one-time gifts from nonprofits is an unusual strategy for cities nationally. In a comprehensive early-2010s study, just 11% of voluntary contributions from nonprofits to local governments nationwide were one-time payments, he said.
Recurring contributions over a long term have upsides for both the city and the contributing organizations, he said
“It doesn’t serve the interests of the city or UPMC to be constantly going back and forth to reach a contribution,” Langley said. “Reaching a long-term agreement would give local government certainty of how much they’ll be receiving each year,” and give nonprofits certainty of how much to budget.
Last month’s $10 million gift could be construed as a reversal in UPMC’s position during prior mayoral administrations, when the healthcare giant routinely said it would participate in a contribution to the city if the city’s other major nonprofits agreed to make proportionally similar commitments.
But both the mayor and the UPMC leader repeatedly termed the contribution a “gift,” and made no mention of a payment in lieu of tax arrangement. UPMC did not respond as to whether they expect other major organizations to make similar gifts.
Asked whether the O’Connor is working toward securing contributions from other nonprofits or a recurring contribution from UPMC, Press Secretary Molly Onufer said the gift from UPMC was not connected to ongoing talks with major nonprofits.
“The donation from UPMC was not a negotiation, and was in addition to the mayor’s ongoing conversations with many private partners about partnership opportunities,” Onufer said.
O’Connor’s approach is starkly different from his predecessors. Ed Gainey, mayor from 2022 through 2025, took an aggressive tone toward UPMC during his 2021 campaign and demanded they pay the city their “fair share.” Once in office he took UPMC and others to court to reverse tax exemptions on many of their properties. The maneuver yielded little money, and detractors in city government said it soured UPMC on making a voluntary contribution.
“It’s undoubtedly true that nonprofits prefer to provide services rather than write a check to the city.”
adam langley
Bill Peduto, mayor from 2014 through 2021, favored forging a voluntary agreement with nonprofits but spent years hammering out the details, seeking to get all the major players on board. He unveiled a plan toward the end of his mayoralty that would have seen the five biggest nonprofits spend $115 million on projects filling city needs over five years.
The UPMC gift bolsters O’Connor’s argument that asking for money for specific needs is more likely to pay off than seeking unrestricted funding. Langley suggested a middle ground.
“It’s undoubtedly true that nonprofits prefer to provide services rather than write a check to the city,” Langley said. “But I would say that there’s kind of a middle ground here where nonprofits agree to long-term payments that are earmarked for specific services that are consistent with the nonprofits’ mission.”
He added that the end result of receiving restricted money can be almost the same as if it were unrestricted: “Money is fungible. The city redirected $10 million that would have gone toward ambulances toward snow plows. Let’s say the university is earmarking PILOTs toward after-school programs, the city could redirect toward another purpose.”
Charlie Wolfson is PublicSource’s local government reporter. He can be reached at charlie@publicsource.org.
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