The 2004 Endow Iowa Legislation allows taxpayers to receive a 20% Iowa state tax CREDIT -- in addition to normal state and federal charitable income tax deductions -- when charitable gifts are made to permanent endowment funds within a “qualified" community foundation. The Foundation for the Enhancement of Mitchell County(FEMC) is a qualified community foundation, according to guidelines required by the Iowa Legislature.
In 2008, a total of $3,000,000 has been authorized for state tax credits on a first-come/first-serve basis. Endow Iowa is an ongoing tax-credit program. If an eligible gift is made to the FEMC after the Legislature's annual allotment for tax credits has been used up, the tax credit will be rolled over into January of the following year to be used for that year's credits.
In order to be eligible, charitable gifts must be made:
- to a permanent endowment fund.
- to the FEMC or similar “qualified” community foundation for the benefit of one or more Iowa charitable causes.
- between January 1 and December 31 of the year in which this tax credit is offered.
The Endow Iowa Tax Credit is 20% of the gift amount and is limited to $100,000 per taxpayer, which is the maximum credit on a gift worth $500,000. Tax credits cannot be applied to prior years' taxes. However, any excess credit not used in the year the credit is awarded may be carried forward for up to five additional years.
For the very latest information on Endow Iowa Tax Credits and their current availability status, click here.
Here's an example of how this amazing new legislation can benefit you and Mitchell County charities:
You make, for example, a $50,000 gift of cash or securities to the FEMC into a permanent endowment fund for the benefit of those particular nonprofits. You make this gift in May 2008. You would then be eligible for a 20% Iowa tax credit -- $10,000 in this example -- on top of the normal federal and state income tax deductions allowed for charitable gifts.
Each year thereafter the specified Mitchell County nonprofits can receive up to 5% of the fund balance from your newly created fund. Alternatively, your fund could be set up as a Donor Advised Fund, and you could then personally advise and direct gifts of up to 5% of the fund balance at the end of each calendar year.
The Iowa Department of Economic Development will issue tax credit letters to donors who have made gifts to permanent endowments in “qualified community foundations.” Eligible gifts made before December 31st qualify for credits on a first-come/first-serve basis until the limit is reached for that year. Once the limit has been reached, your credit would be rolled over into the following year, again, on a first-come/first-serve basis.
Please feel free to contact us at 641-732-4790 to ask any questions you may have about this wonderful philanthropic opportunity created by the Iowa Legislature.