Charity begins at home, but tax breaks can help.
Montana charitable foundations have used the state’s Qualified Endowment Credit to build endowments that are critical to sustaining nonprofit operations over the long term.
The 2013 Montana Legislature is being asked to extend this income tax credit through the end of 2019. Without legislative action, the credit will expire at the end of this year.
Recognizing the value that Montana-based nonprofits provide to the state’s citizens and communities, lawmakers should renew the Qualified Endowment Credit.
“That particular tax credit has enabled many endowments in Montana to work for their nonprofit charity,” said Lynda Moss of Billings, former executive director of the Foundation for Community Vitality and a member of the Northwest Area Foundation board. That St. Paul-based foundation doesn’t qualify for the Montana tax credit, but it supports Montana nonprofits that benefit from the state credit.
“It provides opportunity for people to think about their giving,” Moss said, noting that the credit is for planned gifts that may be part of estate planning.
As noted in a recent guest opinion by Linda Reed of the Montana Community Foundation, our state is home to 73 foundations, which collectively grant millions annually, providing services and retaining wealth in Montana.
In another recent guest opinion, Kurt Alme of Yellowstone Boys and Girls Ranch Foundation pointed out that the credit costs state government at most $2 for every $5 donated, but the value of endowment gifts often exceeds the amount that qualifies for the maximum $10,000 credit.
More than $130 million has been contributed since the credit was first passed by the 1997 Legislature.
In tax year 2011, 511 taxpayers claimed this credit at a cost the state $1.7 million, according to the Department of Revenue. Based on the credit’s limitations, it generated at least $4.3 million in Montana endowment gifts.
On Friday, the Senate Taxation Committee is scheduled to hear Senate Bill 108, introduced by Sen. Taylor Brown, R-Billings, to extend this credit for six years. We call on the committee members to give Brown’s bill their support. The 2013 Legislature should continue this incentive for gifts that enable Montana’s private, nonprofit organizations to help the needy, support the arts and benefit their communities for the long term.