A coalition of businesses, hurt by the recession, is battling to prohibit nonprofit organizations from selling travel, among other things, in competition with the private sector.
The coalition argument, which is being directed at state legislators nationwide, is that nonprofit organizations have a built-in competitive advantage over tour operators and travel agents because they receive tax exemptions, use volunteer labor and pay less postage.In addition, the coalition cites a "halo effect" that allows nonprofit organizations like churches, universities and museums to trade on "public assumption of a lofty purpose."
Examples might be a church-sponsored tour of the Holy Land or a museum-led tour of art in Italy.
Theresa Stanion, the director of the group, the Business Coalition for Fair Competition, in Washington, said in an interview, "The truth is that many of our members, small businesses, have been put out of business by nonprofits' competition."
Thomas R. Frenkel, vice president of Presley Tours in Makanda, Ill., said, "A church in my town operates tours that look like my tours."
He added that the tours can be offered for 20 percent less because of the church's nonprofit advantage.
Frenkel is the new president of the National Tour Association, a founder and moving force in the coalition, made up of three dozen trade associations ranging from the United States Chamber of Commerce and the American Society of Travel Agents to the National Association of Retail Druggists and the American Association of Nurserymen.
At the high end of the price spectrum, tours offered by large museums and universities, which may have special features, can cost a lot more than the same tour sold by a travel agent or tour company.
For example, the Center for the Study of Southern Culture at the University of Mississippi is offering a seven-night cruise in April on the Delta Queen, going from Memphis to New Orleans.
Historians Alex Haley and Shelby Foote and jazz musicians Mose Allison and B.B. King will be on board to speak and perform. Land tours are included as is a stay at the Peabody Hotel in Memphis the first night. The charge for one person in a two-person cabin on D Deck is $2,850.
The regular seven-night trip in such a cabin is $1,790, including meals and entertainment but not shore excursions or celebrity speakers, according to Patti Young of the Delta Queen management. PVA Travel Planning and Management, the commercial organization that put together the sold-out trip, said the cruise would yield a little over $11,000 for the cultural center, which also has overhead.
The Business Coalition for Fair Competition moved its campaign to the states after it failed to persuade Congress and the Treasury Department to take action.
Neither Ms. Stanion nor Frenkel could offer a dollar estimate of how much business their members were losing to nonprofit agencies. Everyone agrees that the offering of tours by nonprofit groups has been on the rise, sharply so in the last five years.
The coalition is now offering a model bill for the states. The bill's stated intent is "to provide additional economic opportunities to private industry and to regulate competition by government agencies and public institutions of higher education."
It would do so by requiring that "if government agencies and public institutions of higher education engage in sales of goods or services at retail, such sales shall not be for less than the costs that would be borne by persons making similar sales in the private sector."
If passed by the states, consumers would find a reduction in tour choices or price increases in nonprofit agencies' tours.
The coalition's hopes were high for Michigan to adopt the measure, but earlier this month the state Attorney General ruled that the bill might violate the state constitution's provision for independence of state universities. The coalition, now waiting for legislatures to reconvene, said that a bill had been prefiled in Wyoming.
The likelihood of passage in any state is difficult to assess. The coalition is optimistic. In a recent mailing to members, it said, "Well-organized plans exist in at least a dozen states," including Arizona, Illinois, Indiana, Kansas, Ohio, New York, Texas and Washington.
Spokesmen for the tour association, with 600 bus tour operators and travel agency members, say they seek a level playing field with nonprofit organizations.
In addition to legislative action, one way they want the field leveled is through firmer application of a federal tax that parallels the corporate income tax. This tax, the Unrelated-Business Income Tax, applies to nonprofit groups' gains from selling goods or services unrelated to the group's primary mission.
In this category, the coalition cites sales of computers by universities, sales of hearing aids by hospitals or operation of health clubs by Y organizations. They also point to trips sold by alumni groups and museums.
The former president of the National Tour Association, George Guenther, who is president of Talmage Tours of Philadelphia, said that the campaign was spurring collection of taxes from the nonprofits.
"In 1985," he said, "before we started beating the drums on this, 2,500 companies filed the Unrelated-Business Income Tax form, and they paid a tax of $30 million. In 1987, 7,000 companies reported unrelated-business income and they paid $137 million."
The question of whether the travel is tied to the mission of the nonprofit group is crucial.
A big tour operator that puts together packages for such clients as the National Trust for Historic Preservation, the Harvard alumni, the Yale alumni and the Art Institute of Chicago says the organizations' travel programs always tie into their overall mission.
"We never go to the beach," said Miki Adams, assistant director of marketing for the agency Academic Travel Abroad in Washington.
"We would go to Leningrad and study art and architecture there or a topic directly related to the mission of the organization."
Ms. Adams said alumni tours were accompanied by a faculty member who would give lectures. William Ferris, director of the Center for the Study of Southern Culture, said that the Delta Queen cruise was another step in his group's effort to take education outside academic walls and made the study of Southern culture accessible.
In its statement of purpose, the business coalition says, "Unfair competition results when a tax-exempt organization - a nonprofit group or government-subsidized agency - sells goods and services, on a frequent and ongoing basis, using its special privileges.
The organization does not use for-profit intermediaries to market its goods and services; rather it sells similar products to compete directly with private, for-profit businesses."
Elaborating on this, John Hawkes, a spokesman for the tour association, said that the target was not groups like the National Trust that use for-profit tour packagers.
"If they can expand the total field of tourism, we have no problem with them," he said.
Rather, he said, it is small-town senior citizen groups, youth agencies, churches and the like that put together tours themselves and offer them to the public - not just their members.
But Guenther, the former president of the tour operators, is not so easily placated because he is concerned not just with the process of assembling the tour, but with its selling.
In this, he says, the nonprofit groups compete with retail travel agents; 60 percent of the tour group's members are also travel agents.
He referred to the tours offered by the 92d Street Y, which BatiaPlotch of the Y said were run by profit-making tour operators. "She is an unfair competitor as a travel agent," Guenther said.
Several representatives of big nonprofit groups said that they doubted that their use of commercial tour operators would deflect an attack by the coalition.
One officer who preferred not to be named said that it was probably easier politically to set up a big, visible target like the Smithsonian than to say the target was the local senior citizens center.
Bryan DeLeo, director of study tours for the National Trust for Historic Preservation, a nonprofit agency that offers tours, said, "It is ironic that members of the coalition would prefer to criticize institutions that offer high-quality educational travel programs rather than endeavor to provide tours of comparable quality themselves."