On Sept. 21, local charitable gambling organizations gathered at Brainerd Legion Post 255 to discuss issues that have arisen across the state. There were several meetings around the state including Brainerd's, all sponsored by Allied Charities of Minnesota.
Among those attending the meeting was McGregor Lion Gambling Manager Jerry Feucht, who is concerned the funds raised through the club’s charitable gambling are taxed to benefit the state of Minnesota more than worthy causes in his own community. Feucht also serves as director on the McGregor Lions Board.
Feucht joined the Lions in 2009 to leisurely serve in his retirement, but said he did not expect or desire to take on such pressing matters.
Feucht now spends time advocating for the state to adopt a fairer tax system for charitable gambling. Such is the situation for many senior volunteers in non-profit groups.
In 2012, charitable gambling regulations were adjusted in conjunction with funding the Minnesota Viking’s football stadium. Over time it resulted in an increased tax burden for many smaller non-profit organizations.
“As a gambling manager I share articles through our newsletter and at meetings, discussing the money we have and the fact the state takes a disproportionate share which lessens our donating ability,” Feucht explained.
In addition to the Lions Clubs, the charitable gambling efforts of various volunteer organizations across the state are adversely impacted by these taxes.
Feucht explained, “When we donate to the school library book program, kids get reading materials they may not get through the state funding. When we donate to Big Sandy Water Institute each year, the youth in the area are benefiting from a summer education program.”
The goal of the recent gathering in Brainerd was to meet with state representatives who could lobby for change in the tax legislation. The case was laid out to area representatives at the meeting, including Rep. Dale Lueck (District 10B).
Last year, Minnesotans spent $1.7 billion on charitable gambling, up from $1.4 billion three years prior. Under state law, charities pay taxes on gross revenue minus prizes paid — called gross profit.
“Gross profit is used to pay all operating expenses except prizes. (Salaries, cost of games and equipment, rent for gambling sites, etc). What is left pays the tax and donations. The taxes are paid based on the total gross profit, unlike any other business. There are 1,200 organizations paying over $50 million in taxes. Right now the state is collecting more in taxes (over 50 percent) which means less than half is now available for donations,” Feucht said.
In his Legislative update following the meeting, Lueck gave an example of how the taxation on charitable gambling played out for the Brainerd Lions Club.
“They were able to donate $77,504 to the local community – after they sent a whopping $95,421 to the state in taxes.”
“The more you earn, the more the real tax percentage goes up. It's a shame,” Feucht said. “Makes you wonder why you would work harder to make money.”
The McGregor Lions have been in existence for 51 years, and have about 80 members. Each year they have operated the Corn Feed in conjunction with McGregor Wild Rice Days.
All funds raised by Lions’ activities are donated. The group’s gambling donations for September included $1,500 to the school library, $3,000 for Operation Christmas, $3,500 to provide holiday food vouchers to those in need in the area, $1,500 to Angels to help with senior home repairs, and $2,250 to the City of McGregor to help operate the McGregor Community Center.
According to the McGregor Lions 2016 audit, almost 43 percent of revenue after all expenses went to the state, leaving the club 57 percent of revenue to donate.
“We have donations that we give annually to a lot of causes, including scholarships, community youth activities, food shelves, and Christmas giving programs,” Feucht said. “All programs could use more funding if it were available.”