Iowa may be first in corn and egg production but it’s a little known fact that we’re also first in the nation for having a tax credit program for charitable giving. There’s good news in Endow Iowa for donors, charities and the state.
The Endow Iowa Tax Credit Program was established in 2003 to encourage individuals, businesses and organizations to make lasting investments in their communities when they establish permanent, endowed funds during their lifetime.
Those who give are able to take advantage of a 25 percent Endow Iowa state income tax credit in conjunction with federal income tax benefits for charitable gifts. Endow Iowa tax credits are offered on a first come, first served basis. There are currently $4 million in credits as of January 1, 2010.
Qualifying charitable gifts include:
- New funds established in the individual's own name. These funds may be donor-advised, designated for specific 501 c (3) organizations, or unrestricted. A $10,000 minimum is required to establish a new fund.
- Contributions of any amount to any eligible endowed fund held at an Iowa community foundation, such as the Greater Cedar Rapids Community Foundation.
With Endow Iowa, our state is at the forefront in creating public-private solutions that drive growth and benefit cities, towns and rural communities. The program offers an effective investment in Iowa’s future: For every $1 of tax credit expended by the state, community foundations leverage $5 in donations to support efforts that enhance the quality of life for residents.
Local perspective and impact
As a result of gifts made through Endow Iowa, the Greater Cedar Rapids Community Foundation is supporting the good works that local donors care about to build a stronger Linn County.
- Since 2003, more than $6 million was contributed to endowed funds at the Greater Cedar Rapids Community Foundation.
- Donors making those gifts received more than $1.2 million in Iowa income tax credits and nonprofits benefited from annual support from the fund.
- In just five years, donors have given more than $50 million to community foundations across the state through the program alone.
- Endow Iowa has spurred the development of more than 250 endowed funds at the GCRCF since 2003.
2010 Changes to Endow Iowa
Under the changes set to go into effect beginning January 1, 2010, donors who make gifts to endowed funds at qualified community foundations or their affiliates will be eligible to receive 25% tax credits for their contributions, an increase from the 20% tax credits currently offered.
The amount of available Endow Iowa tax credits will increase from $3 million to approximately $4 million annually, opening the door for more people to take advantage of the opportunity and to have greater impact in their communities.
While still eligible for federal tax deductions, under the Endow Iowa modifications donors no longer qualify to receive a state charitable deduction for this special contribution.
They will, however, be able to take advantage of the increased tax credit in conjunction with federal tax benefits.
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