Executive Summary
Nonprofit hospitals occupy a uniquely privileged position in the American healthcare system. Their exemption from federal, state, and local taxes—combined with access to tax-exempt bond financing and the deductibility of charitable donations—represents a substantial public subsidy.
These benefits are not honorary distinctions. They are fiscal instruments designed to advance public purposes. When governments forgo tax revenue, they are making a deliberate investment decision. The expectation is simple: the value of the subsidy should be matched or exceeded by measurable public benefit.
In North Carolina, nonprofit hospital systems receive billions of dollars in tax advantages each year. A widely cited analysis commissioned by the North Carolina State Health Plan estimated that nonprofit hospitals collectively receive approximately $1.8 billion annually in federal, state, and local tax exemptions. ¹
Yet evidence suggests that the community benefits delivered in return—particularly charity care for low-income patients—often fall short of that figure. Researchers reviewing North Carolina hospital financial filings found that nonprofit hospitals provide charity care worth substantially less than the estimated value of their tax subsidies. ²
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