Credits for a Cause

While tax credits can be claimed for everything from education and adoption to economic development, state tax credits are particularly beneficial for some Missouri nonprofit agencies and their donors.

Ted Smith, a certified public accountant at Compere and Robinette CPAs PC, said the appeal lies in the credit maximums, which can go as high as dollar-for dollar, compared with the maximum 6 percent that can be claimed for other charitable donations.

“If you get a $100 credit, you have a $100 tax benefit,” Smith said.

For tax credits tied to donations that benefit Good Samaritan Boys Ranch, the tax benefit is between 50 cents and 70 cents on the dollar, but the appeal remains, said Julie Conway, director of development and public relations.

Conway said tax credits available in 2011 through the Neighborhood Assistance Credit – which provides a 70 percent tax credit – allowed the ranch to raise $500,000 for capital improvements to its Brighton campus.

“They were gone within a couple of months. I had calls right up until (Dec. 30) from people asking about availability,” Conway said.

Tax credit offers
In 2010, the ranch obtained $500,000 through the Youth Opportunities Credit for a new building. The YOC offers a 50 percent tax credit.

Efforts by Good Samaritan Boys Ranch to raise funds with tax credits in the last 10 years have netted more than $5 million, Conway said.

“They have been a huge, huge tool for us for raising money, especially for capital improvements,” she said.

Improvements made possible through donations in exchange for tax credits include new dorms, a dining hall, a new administration building and school, an indoor pool and a calving barn at the 180-acre ranch 14 miles north of Springfield on Missouri 13.

“This campus would not look at all like it looks now if it weren’t for those credits,” Conway said.

The Boys & Girls Clubs received $350,000 in tax credits in 2011 through the same two programs Boys Ranch taps into, which will help the club reach its goal to bring in 150 new members, said Director of Resource Development Chris Whitehead.

Jon Risdal, owner of J-K Investments Inc. and Risdal Enterprises Inc., and a Boys & Girls Clubs board member for about 15 years, said tax credits have been invaluable for helping the club expand its reach and its facilities, encouraging him and others to give more than they might otherwise. The club has used the tax credits to build two new units and remodel another, Risdal said.

“I know personally, I had several of my friends that gave large sums of money because of the tax credits,” he said.

Though he declined to disclose how much he’s personally donated through the years, he said the tax credits have led him to increase how much he’s given.

“They got some new tax credits this year, and I literally doubled my donation,” Risdal said.

Whitehead said the club will continue to apply for tax credits whenever possible.

“We just keep trying and keep going because there are so many kids out there who need the club,” Whitehead said. “We wouldn’t be at the point where we are without tax credits. It’s a huge incentive to donors.”

Assess availability
State tax credits and the circumstances under which they may be used are enacted by the Missouri General Assembly and vary in length of availability.

In the first quarter of the state’s fiscal 2012 – July-September 2011 – Missouri had more than 70 tax credit programs available, according to the Missouri Department of Revenue. Nine different divisions of state government administer the tax credits, and each tax credit program has its own set of rules on how and by whom they can be used.

Not all charitable organizations are eligible for tax credits, Smith said. Credits that are most directly pointed toward charitable organizations are typically family and youth-centric, including Children in Crisis, the Pregnancy Resource Center and Maternity Home tax credits.Some tax credits used by for-profit businesses have come under scrutiny in recent months for failing to bring proper returns to the state. Public policy think tank Show-Me Institute, for example, has come out against credits aimed at job creation because they only benefit certain types of businesses.

Before making a donation, Smith recommends going online to DOR.Mo.gov/taxcredit/ to explore what credits are available and how they are used.

“It’s a good clearinghouse for that information so you don’t have to hunt and peck for each one,” Smith said.

Following a link to the Domestic Violence Shelter Tax Credit, for example, will take users to a list of domestic violence shelters statewide that are eligible for the tax credit program.

Accountants also are a good resource, Conway said, noting that she gets calls each year from accountants looking for a way to reduce clients’ state tax burdens through tax credits.

“A lot of times, they’ll contact me before I can get to them,” Conway said.

Through the paper hoops
Neither obtaining nor claiming tax credits is simple. Organizations have to apply to receive a portion of available credits for specific projects. The amount available each year shifts and has dwindled in recent years, Whitehead said.

On the donor end, there are a few key things to remember, Smith said.

“You’re going to need to get a certification of some sort from (the organization) – maybe a certificate, maybe a form,” Smith said. A special tax form, MO-TC, will need to be filled out and attached to the return. Also needed: A copy of the payment, either via check or credit card. And finally, be aware that if tax credits are used, returns cannot be filed electronically.

“Bottom line: Make sure you get a certificate, keep a copy of the check or credit card, then know you’re going to fill out an additional form and mail it in,” Smith said.[[In-content Ad]]