Payments in lieu of taxes (PILOTs): How characteristics of requests for PILOTs impact nonprofits’ fairness perceptions and likelihood of compliance |
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| Institution: | 1. Business School, Korea University, Seoul 02841, Republic of Korea;2. Lundquist College of Business, University of Oregon, Eugene, OR 97403, USA;3. College of Business Administration, Loyola Marymount University, Los Angeles, CA 90045, USA;1. Dhaliwal-Reidy School of Accountancy, University of Arizona, 1130 E. Helen St., PO Box 210108, Tucson, AZ 85721, United States;2. LeBow College of Business, Drexel University, Philadelphia, PA 19104, United States;3. Neeley School of Business, Texas Christian University, Fort Worth, TX 76129, United States;1. School of Management, University of Bath, UK;2. Renmin Business School, Renmin University of China, China;3. School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong;1. Department of Accountancy and Information Systems, Villanova University, United States;2. School of Accounting, Florida International University, United States;1. Harbert College of Business, Auburn University, 345 Lowder Hall, Auburn, AL 36830, USA;2. College of Business, Colorado State University, Rockwell Hall Room 256, Fort Collins, CO 80523, USA |
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| Abstract: | Despite the growing importance of PILOTs for cities and nonprofits, little is known about how characteristics of requests for PILOTs influence fairness perceptions and compliance. We examine how PILOT frame (carrot versus stick) and procedure (systematic versus ad hoc) jointly influence the fairness perceptions of requests for PILOTs and whether these perceptions, in turn, influence the likelihood of compliance. We conduct an experiment and find that requests framed as a carrot, rather than a stick, are perceived as more fair. Requests that are administered in a systematic, rather than ad hoc manner, are perceived as more fair, but only when the request is framed as a carrot. Perceptions of fairness, in turn, increase the likelihood that nonprofits will comply with the request for PILOTs. A follow-up survey of senior nonprofit executives confirms that PILOT frame and procedure affect their perceptions of fairness similar to our experimental participants. Importantly, survey participants indicate that perceptions of fairness are a significant determinant of their cooperation with the city, not only on the request for PILOTs, but also on future collaborative initiatives. We discuss the implications of our study for entities affected by PILOTs. |
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| Keywords: | PILOTs Nonprofits Procedural fairness Interactional fairness |
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