A new Massachusetts tax credit taking effect in 2014 provides individuals with an unprecedented opportunity to deepen the impact of their philanthropy while gaining significant tax benefits. The Community Investment Tax Credit (CITC) is designed to encourage individuals (and companies) to donate to highly effective organizations that are helping to expand economoic opportunities for families and communities across the state. These organizations, called Community Development Corporations, enable local residents to come together and take concrete steps to improve their communities by building affordable housing, renovating dilapidated properties, starting and growing local businesses, helping families build financial knowledge and capacity, and otherwise improving the quality-of-life in their community. What’s more, emerging research is demonstrating that effective community development can improve community and public health, increase educational attainment, reduce violence and crime, and promote environmental sustainability. This means that individuals with a wide-range of philanthropic motivations might be interested in the CITC program.
The CITC program was enacted in 2012 and took effect earlier this year when the state allocated $3 million in tax credits to 38 organizations across Massachusetts. These tax credits allow donors to receive a 50% tax credit for every dollar donated to these selected organizations: Give $10,000 and receive a $5,000 tax credit on your Massachusetts state taxes. And if you don’t have any tax liability, you can get a refund! This means that Donor Advised Funds can participate as well, with the 50% refund (or rebate) being deposited back into the Fund for future giving. The Mass. Department of Revenue has just released its draft regulations, which explain how different entities can claim the credit.
The CITC will generate a total of $6 million for high-impact, resident-led community development in 2014 and twice that amount in 2015 and beyond when the tax credit cap is extended to $6 million annually. The scale and structure of this exciting new program provides a great opportunity for individuals to work with the best CDCs in the state to improve our communities. Please contact a DGC advisor for more information on the CITC.