Taking Credit: State tax credits

Several area nonprofits organizations have tax credits available for purchase. Buyers can use them to cut the amount of taxes they’ll owe, and the selling organizations can use the money raised to meet facility or operational needs.

The programs are fairly straightforward. Organizations apply for tax credits from the Missouri Department of Economic Development. If the organization is granted those credits, it can then sell them to donors at 50 percent value.

For example, if donors give $1,000, they can get $500 worth of tax credits that can then be applied to their annual state tax returns, in addition to the federal write-off that goes with the actual donation.

Patrick Gartland, executive director of Boys and Girls Club of Springfield, said his organization is using two tax credit programs – the Neighborhood Assistance Program and the Youth Opportunity Program.

Boys and Girls Club received $500,000 in state tax credits – $250,000 for each program – and has used them to leverage money to support the group’s general operating budget, and toward the ongoing construction of a new unit in Grant Beach Park and renovations to the Musgrave Unit in west Springfield. The club has $165,000 in NAP credits still available; all of the YOP credits have been sold.

“If a donor likes the Boys and Girls Club and wants to support it, this is a great incentive for them to do more than they would have,” Gartland said.

Four other Springfield organizations – Discovery Center, Girl Scouts of Dogwood Trail, Habitat for Humanity of Springfield and Junior League of Springfield – have projects under way using NAP credits totaling more than $560,000, according to the Missouri DED.

Girl Scouts of Dogwood Trails Council is a first-time user of NAP credits, which will be used to cover general program expenses, according to Lin Perkins, fund development director. Perkins said the organization received $11,500 of the tax credits, and most of them are still available.

Big Brothers Big Sisters of the Ozarks received $217,000 in YOP credits earlier this year to build the new John P. “Jack” Heitz Center at 3372 W. Battlefield St. About $115,000 of the credits are still available.

Executive Director Lisa Slavens said the credits are an incredible tool for raising funds.

“People have different missions they believe in, and they want their money to go to something they believe in,” she said. “So if they can give money to us, and save some in the process, it’s a win-win situation.”

Awareness

It’s not hard to convince donors of the benefits of purchasing tax credits. The issue, according to many nonprofits, is making potential donors aware that the tax credits exist.

“There are some people who know about them – some of the major donors and their accountants,” Gartland said. “But we have to constantly educate people about the credits and their benefits.”

BBBS Director Slavens said her organization tries to spread the word by informing accountants and financial planners, who can then spread the word to their clients.

“A lot of times folks don’t realize the tax implications they’ll have at year’s end, but their accountant certainly knows, and they can go back to them with the option,” she said.

Awareness, however, is growing. Emily Fox, CEO of the Discovery Center, used tax credits from the Missouri Development Finance Board to leverage gifts for the facility’s recent expansion.

Discovery Center received $190,000 in NAP credits; about $125,000 worth is still available.

“They have been fabulous tools to help donors,” Fox said. “There are so many donors out there now that are very educated on the tax credit programs, and they look for them. So when they call me to ask about making contributions, they ask if we have tax credits.”

Accountants also try to make their clients aware of them.

Bill Miller, shareholder with Kirkpatrick, Phillips & Miller CPAs PC, said he recently sent a letter to all of his clients, advising them of the opportunity to reduce their tax liability.

“Between the deduction you receive in your federal return for a charitable contribution, and the credits you receive from the state of Missouri,” Miller said, “it can save 60 to 90 percent of how much you give.”

He added that there are additional benefits for people who pay the alternative minimum tax instead of standard federal income taxes.

Competition

There are several tax credit programs available through the DED, but NAP and YOP credits are the most widely used by nonprofit organizations.

As with any state program, resources for tax credit programs are limited – and limited resources lead to increased competition.

“It’s a pretty lengthy process,” Boys and Girls Clubs’ Gartland said of the tax credit application process.

“The document you need to fill out is several pages, and then you need to get support letters from several people in the community, saying you can do what you say you’ll do.”

DED spokesman Gregg Ochoa, said the department realizes that not everyone will get a piece of the pie; only $12 million in 50 percent tax credits is available this year through NAP.

Another $6 million in NAP credits is available, but limited to unincorporated or rural areas. The state has $6 million available for YOP credits.

“The programs that submit applications are really in competition with themselves to submit a project that meets the standards set by the program,” Ochoa said. “There’s competition in the sense that not all good programs get funded, because funding does run out.”

Despite the struggle to get the credits, nonprofit organizations agree the benefits far outweigh the work needed.

“As taxpayers, it’s a choice,” Discovery Center’s Fox said. “Your state tax dollars can go up to Jefferson City and be spent across the entire state, or they can benefit a charity in your own hometown. It can help keep those dollars here, supporting organizations that are here.”

Want credits?

More information on the Neighborhood Assistance Program tax credits can be found at http://go.missouridevelopment.org/nap.

Information on Youth Opportunity Program credits can be found at http://go.missouridevelopment.org/yop.

Local groups using state NAP and/or YOP tax credits

Big Brothers Big Sisters of the Ozarks

Boys and Girls Club of Springfield

Boys and Girls Club of the Ozarks (Branson)

Discovery Center of Springfield

Girl Scouts of Dogwood Trails Council

Habitat for Humanity of Springfield

Hope House of Miller County (Lake Ozark)

Junior League of Springfield

K-Life Taney County (Branson)

Marshfield Child Development Center

Ozark Main Street Program

Ozark Mountain Family YMCA (Hollister)

Ozarks Family YMCA (Mountain Grove)

Rogersville Community Betterment Group

Vernon County Seniors (Nevada)

Source: Missouri Department of Economic Development