State officials call new charitable giving tax credit program a success
The tally is in on a new Massachusetts tax credit designed to promote a specific type of charitable giving, and state officials say they’re pleased with the outcome.
Called the Community Investment Tax Credit and available for the first time in 2014, it offers a 50 percent credit to anyone who donates money to a community development corporation, or CDC, which is a nonprofit that tries to improve low- and moderate-income neighborhoods.
It’s a complicated program in which CDCs receive allocations of credits that they use to entice donors. A $1,000 donation results in a $500 credit to the donor,which means a CDC allocated $100,000 in credits must raise at least $200,000 in contributions to maximize its credits. The goal is to use government money to attract private dollars.
State revenue is expended only if the credits are claimed.
Last year, $3 million in credits were allocated to 38 CDCs statewide, and state officials now say nearly $2.4 million of those credits were claimed. That translates into almost $4.8 million collectively donated to the CDCs by approximately 1,100 total donors.
“We’re delighted with the results for the first year of this program,” said Joseph Kriesberg, president of the Massachusetts Association of Community Development Corporations. “It’s funneling philanthropy to high-impact organizations, and this is by far the largest infusion of private philanthropy into community development that I can recall in the last 20 years.”
The most successful CDC was West Tisbury-based Island Housing Trust, which works to bring affordable housing to Martha’s Vineyard. Its donors used all but $500 of the $110,000 in credits the organization was allocated, contributing $219,000 in the process.
Several other top performers, including the Franklin County CDC in Greenfield, were in rural communities, even though “when this started most of us assumed Boston groups would have access to the most donors, the most corporations, and the most money,” Kriesberg said.
The majority of donors were individuals, but there were also corporate contributors. State Street Corp. gave $500,000 to the United Way’s Community Partnership Fund, which distributes the money to CDCs across the state. Boston Private Bank & Trust Co. donated about $110,000 among 16 CDCs. And New Balance made a $40,000 donation to the Allston Brighton CDC.
The CDCs use the donations to spur economic development in a variety of ways, from offering job training to building affordable housing to providing after-school programs.
Some groups had considerably less fund-raising luck, but “we never expected every CDC to have 100 percent success because that’s not how the world works,” Kriesberg said.
“We knew that in the first year of the program there was going to be a steep learning curve for the state agencies administering it, for the CDCs involved, and for donors,” he added, “so to get as far as we did and see as many groups succeed as they did is very exciting.”
Another $5.2 million in credits have been allocated for 2015, and $626,000 in unused credits from 2014 will roll over into this year. In addition, another $800,000 in credits are expected to be allocated by year’s end, making more than $6 million available for 2015. The program is slated to expire in 2019.