Neighborhood Boost: Officials consider state tax credit program ‘a win-win’ for recipients, donors

A state tax credit program designed to primarily help nonprofits fund community initiatives and boost economic development is benefiting a project for one Springfield organization for the second time in five years.

Through the state’s Neighborhood Assistance Program, Community Partnership of the Ozarks Inc. earlier this year received $100,000 for the O’Reilly Center for Hope, the nonprofit’s $3.5 million community hub that opened in 2020. The center, housed in the former Pepperdine Elementary School at 1518 E. Dale St., serves as a community resource where the nonprofit teams with over a dozen agencies to provide affordable housing and homeless prevention services.

Missouri Department of Economic Development officials notified CPO in February it was among several southwest Missouri nonprofits selected for a cumulative $1.8 million of the $7.2 million in statewide NAP tax credits, according to past Springfield Business Journal reporting. The state program holds two application rounds per year, one in the spring and one in the fall, according to the DED website. Other area nonprofit recipients announced earlier this year, and the amount awarded, were Boys & Girls Clubs of Springfield Inc. ($250,000), Breast Cancer Foundation of the Ozarks ($200,000), Cope in Lebanon ($100,000), Crisis Nursery of the Ozarks Inc. ($116,171), Dallas County Health Foundation in Buffalo ($250,000) and Elevate Branson ($349,734).

The latest funding round marked the second time CPO had received NAP tax credits for the O’Reilly Center for Hope. President and CEO Janet Dankert said the nonprofit also was given $200,000 in tax credits in late 2018 to be used toward the renovation of the 24,000-square-foot building in northeast Springfield.

“That’s the only capital campaign that we’ve ever run and, obviously, our biggest investment in the community. Since I’ve been the CEO, those were the only two awards we’ve had,” she said of the tax credits, noting she’s been leading the organization since 2011.

Credit eligibility
NAP tax credits are available for projects in the categories of community services, crime prevention, education, job training and physical revitalization, according to the DED. Eligible applicants are nonprofits and some faith-based organizations and businesses that meet state requirements. Any person, firm or corporation with business income in Missouri, including sole proprietorships, farm operators or members of limited liability corporations, can be issued tax credits by donating to eligible community projects.

The DED issues 50% or 70% tax credits to an eligible taxpayer who makes a qualified contribution to an approved NAP project, said Krystal Creach, partner at public accounting firm FORVIS LLP. The 70% tax credit is reserved for projects in certain lower population or unincorporated areas. The maximum amount of tax credits that can be authorized per fiscal year is $16 million, according to the state DED, $10 million of which is allocated for 50% credits with the remainder for 70% credits.

“There’s a process where they award these credits to the organizations. A donor then gives to the organization and gets a percentage credit back,” said Creach, a certified public accountant. “For example, you give a $10,000 donation, you get a 50% tax credit and $5,000 credit back against your Missouri tax return.

“The key being it’s a dollar-for-dollar credit that reduces your tax, which would be different from a deduction,” she added. “A deduction is just reducing the income that’s taxed. (The credits) can directly impact the amount of tax you pay.”

Businesses can donate cash, materials, supplies, equipment, technical assistance, professional services, labor, real estate or stocks and bonds to qualify for the credits, according to the DED. The credit may first be claimed on taxes due for the year the contribution was made.

“You can do a one-time donation, but it can carry forward five years,” Creach said, noting the credit may not be used to offset taxes for any year prior to the contribution. “So, you basically have five years to use that tax credit. You don’t have to do it all in one year.”

Under the radar
NAP and its tax credit benefits are not as widely known as they probably should be to eligible donors, Creach said.

“I do think there is an education that can be involved, both from our side as CPAs talking to clients but also from the organization side. Usually, (nonprofits) have something on their website or talk about it,” she said. “It can be a hard concept to understand if you’re not doing it every day. It is not understood well enough the tax benefits you can get from it.”

Dankert agreed that while some potential donors might not know about them, it’s important for nonprofits to get the word out, noting CPO did so upon receiving tax credits in 2018. CPO raised $190,000 in donations from the $100,000 in tax credits it was awarded. This year’s $100,000 in NAP tax credits will go toward the O’Reilly Center’s operations.

“We are just starting that campaign, so we haven’t raised anything yet,” she said. “We do have to do marketing to, one, make sure that the community knows that we have them available, and two, to target the right folks who might be interested.”

Creach said NAP tax credits serve as a way for organizations to attract donors.

“If they market that they have it, it’s a great way to attract more people or have them give a little bit more,” she said.

Of the roughly 20 donors that gave to CPO during its first capital campaign for the O’Reilly Center, Dankert said three of them were new contributors.

Leslie Peck, owner of Peck’s Insurance and Financial Services Inc., is among CPO donors for the O’Reilly Center. She said she plans to donate again soon to take advantage of the 50% tax credits.

“I’ve used them quite a bit,” she said, estimating around 10 times in the past. “I would be making contributions anyway to the organizations that I give to. And when they have tax credits, it’s kind of a win-win for everybody because they get probably a more substantial gift.”

Peck, who also serves as a board member at CPO, said as a company owner for roughly 20 years, she looks for opportunities to meet charitable goals. While she primarily donates to CPO, Peck said she also has capitalized on tax credits with Ozarks Food Harvest Inc. and The Victim Center Inc. In most instances, she trusts the nonprofit to put her donation where it makes the most sense.

“I would rather leave the use of the contribution up to the leadership of the organization,” she said.

With its newest tax credits in hand, CPO is gearing up to solicit donations, Dankert said.

“We would look at the O’Reilly Center as the main project for NAP tax credits,” she said. “It’s a two-year cycle, so we will raise the funds over the next two years and then we will apply for a future two years to continue those tax credits coming in for operations.”

At FORVIS, tax credits are frequently discussed during meetings, Creach said, adding she often brings the topic up with clients.

“That’s especially with people who are looking for different ways to fulfill their philanthropic goals,” Creach said. “I always use a caveat with clients to say don’t just do it solely for the tax benefit. But if you are going to be giving anyway, it’s a great way to find tax-efficient giving.”