Donor benefits push year-end nonprofit gifts

As the calendar year winds down, corporate giving to nonprofits picks up as businesses look for ways to reduce tax liabilities, and area nonprofits anticipate the increase in financial support as eagerly as the donors look forward to the tax benefits.

“Absolutely our big months for donations comes at the end of the year,” said Julie Conway, director of development and public relations for Brighton-based The Good Samaritan Boys Ranch, which serves abused and neglected boys.

Donations totaled $984,839 of the organization’s $5.1 million budget for the fiscal year that ended in June. Of those, more than one-third, or $354,000, was raised in December 2009, Conway said.

Boys and Girls Club of Springfield Inc., which offers after-school and summer programs for children, raised $185,000 in unrestricted contributions in the last quarter of 2009 for its $2.6 million budget, said Executive Director Pat Gartland, noting that demand for services through the organization is up 5 percent, but unrestricted donations are down so far this year by 40 percent. A 10 percent increase in grant funding is helping to make up the shortfall, Gartland said.

“We did very well last year, but this year, we’re really nervous about the economy,” Gartland said.

Reasons to give
It’s likely that local giving picks up more because people want to do the right thing than just wanting tax deductions, said Debbie Fritz, a certified public accountant with Samek Fritz & Co. PC.

“In this area, I don’t think, with small businesses, it’s about planning on giving to get the tax credits (as much as) about being in the Bible Belt and having more consistent givers,” she said.

Even so, that doesn’t mean business owners can’t reap the benefits of helping others. Fritz said an easy way to calculate tax savings for donations is to multiply the company’s marginal federal and state tax rates by the amount donated.

For example, Fritz said if the federal tax rate is 28 percent, a company saves $280 for every $1,000 donated, though she noted that it’s important to check with tax advisers about limits for personal and company donations and other restrictions.

Not all community organizations are created equally in terms of tax savings Terry McCullough, managing partner with McCullough & Associates LLC, said donors also need to research the entities they support.

Checking an organization’s 501(c)3 status is an easy step, and if it’s unclear, McCullough said there’s a list on the Internal Revenue Service Web site, www.irs.gov.

Companies also can avoid sales proceeds taxes by donating stock or land to charity, receiving a deduction on fair market value, though the land must have a valid appraisal, McCullough said.

Companies can get tax relief by donating to organizations that have tax credits available. For local groups, these credits typically are offered through the Missouri Department of Economic Development’s youth opportunity or neighborhood assistance programs.

Once an organization applies for and receives tax-credit approval, the credits are offered for as much as 70 percent in rural areas, or, more often, 50 percent for projects in urban areas. Tax credits translate into at least a $5,000 deduction on state taxes for a $10,000 contribution, for example, and donors also get credit for a charitable donation on federal taxes.

“This really gives donors a big bang for their buck,” McCullough said. “Another benefit is that you can direct it to a specific organization and help a local cause.”

Gartland said 50 percent tax credits helped fuel end-of-the-year giving for Boys and Girls Club in 2009. The organization has $20,000 in tax credits left but has not yet received funding for additional credits , he said.

Conway said Good Samaritan Boys Ranch used a 70 percent tax credit offering to raise $354,000 in December 2009 toward $500,000 in renovations at its Brighton campus.

This year, the organization is offering 50 percent tax credits to raise another $500,000 toward the construction of Footsteps Transitional Living Group Home in Springfield, a residential facility for boys who are aging out of the foster care system. “We’re only at $150,000 right now, but we hope to raise at least $300,000 in December this year,” Conway said.

Drive for donors
Since it’s not uncommon for giving to pick up toward the end of the year, it makes sense that the United Way of the Ozarks, which provides support to 23 organizations and eight initiatives, traditionally holds its annual campaign September through October. President
Jennifer Kennally said $3.5 million of United Way’s $5 million 2009 budget was raised in the last quarter of the year.

Kennally, Gartland and Conway all are concerned that economic conditions could result in less profitable companies that need fewer tax breaks, which could, in turn, drive down donation amounts.

“We’ve added $5,000 to our goal, but we hope to remain just pretty much flat from last year,” Kennally said. “The worst thing we can do is to allocate money and then not have it to give to these agencies.”

Kennally said some support for United Way comes via employee payroll deductions, and on the bright side, she noted that the local organization hasn’t been as affected by layoffs as those in other cities where large corporations have laid off thousands of workers.

“Our uncollectables remained at around 7 percent,” she said.

Still, all three are hopeful that the Ozarks’ spirit of giving will trump economic concerns.

“The holiday season is a good time to give, and we’re sure that people and companies will come out and support the charities again this year,” Gartland said.[[In-content Ad]]