Project Profile:

State of Michigan, various Michigan community foundations

In Michigan, public broadcasting stations and private colleges benefited from a limited tax credit for private donations. As the Michigan Community Foundations’ Youth Project (MCFYP) was implemented, the decision was made to try to obtain a similar tax credit for endowment funds held by community foundations. Taking what was known about the public broadcasting tax credit, the Council of Michigan Foundations (CMF) — with the support of all of its members, including community, corporate, family, and independent private foundations — proposed a similar tax credit for gifts to the permanent endowments of community foundations. The tax credit passed in 1989, and lasted until 2011.

The tax credit provided a leveraging opportunity for the community foundations in reaching out to smaller donors. There was an annual cap on the tax credit of $100 for individuals, $200 for couples filing jointly, and up to $5,000 or 10% of Michigan business tax liability, whichever was less.

Community foundations realized that with the increased opportunity for new donors that the tax credit created, they would need more consistent marketing materials to help communicate their missions. This led to the development of the Venture Products Fund of the Michigan Community Foundations’ Ventures (MCFV), a supporting organization of CMF. In 2011, the community foundation tax credit was repealed as a means for reducing Michigan’s chronic budget deficit. It has continued to have a national effect however, as the idea of a tax credit for community foundations was picked up by the states of Montana, North Dakota, Iowa and Arizona.

• In the first year alone, $2 million in additional funds were raised for foundations across Michigan, thanks to the tax credit. The outside evaluation of the tax credit found that this incentive attracted new donors to community foundations.

• Established a tax credit for individuals, couples, or businesses donating to the permanent endowment of a community foundation
• Sparked an exponential growth of new donors and funds to community foundations for its duration

Video: Watch leaders discuss the Michigan Community Foundation Tax Credit:

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