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Credit crunch: Not-for-profit groups struggle to get or to use up state income tax credits

Thursday, April 12, 2012

(Photo)
Jeff Martin and Deb Martin, ambassadors for Lutheran Family and Children's Services of Missouri, organize toddler clothing April 4 in Cape Girardeau.
(Laura Simon) [Order this photo]
Some community organizations are searching for donors to commit to using their state tax credits, while others wish they had them to give.

Both Lutheran Family and Children's Services and the Southeast Missouri Food Bank are looking for people interested in receiving tax credits worth 50 percent of each donation through the Missouri Department of Economic Development's Neighborhood Assistance Program in exchange for donations. The Discovery Playhouse has potential donors who want those credits, but its applications have been denied.

NAP credits provide state income tax vouchers to eligible donors who contribute to not-for-profit organizations that focus on community service, education, crime prevention, job training and physical revitalization.

Donors have five years to use the tax credits. Across Missouri last year, $8.1 million in Neighborhood Assistance Tax Credits were issued and $8.5 million were redeemed.

They were used by the Discovery Playhouse to help raise $475,000 as part of a capital campaign that ended shortly before the children's museum opened to the public. The Discovery Playhouse has reapplied twice for more tax credits but has been denied both times, said Jennifer Mullix, executive director.

The funds helped pay for windows, plumbing, a heating and cooling system and went toward exhibits, Mullix said.

"They were an essential tool for us for fundraising," she said.

The organization was awarded $250,000 in credits but wasn't able to use them all before they expired in 2010. Now, it has donations pending and is waiting to hear if it gets tax credits in the next round, Mullix said.

Melody Anderson, director of regional development for Lutheran Family and Childrens Services in Cape Girardeau, is scrambling to find donors before her organization's tax credits expire at the end of June. The organization statewide has $203,000 of its $500,000 in NAP credits still available. Donations made in Southeast Missouri average about $140,000 annually and are used specifically for programs in this region, she said.

Where it used to take just 85 donors to meet Lutheran Family and Children's Services' goal, last year it took more than 300 donors, Anderson said.

"But we still have the same number of people working trying to spread the word," Anderson said.

They also have more and more people coming to their organization for help, Anderson said. Last year, more than 1,000 sought help.

'Everyday people'

Lutheran Family and Children's Services helps people regardless of their faith in 15 Southeast Missouri counties through its birth parent counseling, adoption assistance and emergency assistance programs. The organization also provides older adult counseling and helps seniors with memory loss groups. Contributions through the NAP tax credit program account for 12 percent of the organization's annual budget.

"Sometimes the general public thinks 'I don't make enough.' They think only millionaires make these contributions," Anderson said.

She said the majority of her donors who receive NAP tax credits are just "everyday people."

"They're living in the same house they've lived in for 30 years and driving a car that's 10 or 15 years old," she said.

Karen Green, executive director of the Southeast Missouri Food Bank, said she is convinced that many business people who would qualify are unfamiliar with the NAP tax credit program.

The food bank recently received a one-year extension to use $250,000 in NAP tax credits it was granted to help fund a new warehouse.

"I believe we would have more donor opportunities if our funds were for our core purpose of feeding the hungry. We are limited to those who would donate for bricks and mortar," Green said.

Individuals who operate a sole proprietorship, operate a farm or have rental property are eligible for the NAP tax credits, as well as shareholders in S-corporations, partners in a partnership or members of a limited liability corporation.

Jim Hillin, an accountant with Hillin & Clark in Cape Girardeau, said in addition to the 50 percent tax credit voucher donors receive, people can also deduct the donation as a charitable contribution on their state and federal income taxes.

"Their actual out-of-pocket expense is quite small compared to the donation they made," said Hillin, who has encouraged several clients to contribute to Lutheran Family and Children's Services through the NAP tax credit program.

Financial planner Rick Cuba of Cuba Financial Group, who worked with Lutheran Family and Children's Services years ago to adopt his two sons, also recommends their NAP tax credit program to his clients.

"In working with people, you get to know if they are charitably inclined," Cuba said. "We let them know what they do can be multiplied by four or five times through a program like this."

'Doing great things'

Bank of Missouri has contributed to Lutheran Family and Children's Services through the NAP tax credit program the past three years.

"It's one way for us to give back to our community, and that is one of our foundational things. We are very into our community. Plus, it does give us that benefit," said Dawn Dauer, community bank president with Bank of Missouri.

Vernon Kasten, a donor to Lutheran Family and Children's Services, said he likes the multiplier effect of the tax credits.

"You can give a lot more. Otherwise half of it is going to the state anyway. You know you have a worthwhile cause that's doing great things," Kasten said.

Tax credits in Missouri have been a topic of controversy the past few years.

A 27-member tax credit review commission appointed by Gov. Jay Nixon in 2010 studied the state's 61 tax credit programs and recommended eliminating nearly half of them, including the Neighborhood Assistance Program tax credits. The legislature has failed to pass any broad-based tax credit reforms since the commissions findings were released.

The Missouri Department of Economic Development is accepting public comments on proposed NAP guidelines and applications for fiscal year 2013 through Tuesday. Comments may be emailed to zatuilla.nara@ded.mo.gov.

mmiller@semissourian.com

388-3646

Pertinent address:

3920 Nash Road, Cape Girardeau, MO

3178 Blattner Drive, Cape Girardeau, MO

502 Broadway, Cape Girardeau, MO


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Deductions and credits
If a donor in the 28 percent federal tax bracket contributed $1,000 to a local organization through the Missouri Department of Economic Development's Neighborhood Assistance Program, the donor's actual cost would be $160.

Donation of$1,000
Missouri tax credit -$500
Federal tax deduction -$280
Missouri tax deduction-$60
Actual cost$160

SOURCE: Lutheran Family and Children's Services

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