Endow Iowa Tax Credit

The Endow Iowa Tax Credit Program provides a wonderful incentive for citizens interested in giving back to support important charitable organizations and causes in their communities. No other charities or foundations can offer donors the Endow Iowa Tax Credit. It is offered only through qualified community foundations. The Endow Iowa tax credit is 25% of the amount of the endowed charitable gift. The State of Iowa offers this tax credit as an incentive to encourage community-minded citizens to donate and give back to their communities to enhance the quality of life in their cities, towns and counties.

Donors who establish an endowed fund with a qualified community foundation, (the Fort Dodge Community Foundation is a qualified community foundation) are eligible to receive a 25% state of Iowa tax credit for the amount of their gift and also take full advantage of federal income tax deductions that are afforded to charitable gifts. The example below is based on an endowed gift of $10,000 to a community foundation with the donor being in a 28% tax bracket.

$10,000 donation
$ 2,800 may be saved on federal taxes
$ 2,500 25% state tax credit
$ 5,300 = net tax savings
$ 4,700 = donor cost

The Fort Dodge Community Foundation enjoys a flexibility that allows us to work closely with donors and respond to their charitable interests and goals. Endowment funds benefit the community for the long-term and serve as a permanent “investment account” for the community and county. Endowed funds are prudently invested to grow over time. A portion of the earnings from the funds’ balance (usually 4 to 5%) can be granted out on an annual basis to support community needs and charitable causes specified by the donor. The remainder of the investment yield is returned to the principal so the funds will continue to grow and become a permanent source of capital, helping do good work today and in the future.

Many donors want to know that the things they care about—a place, a community service, an institution or organization — will be supported long after they are gone. An endowed fund through the Fort Dodge Community Foundation can support the charitable causes that donors care about most and offer them attractive tax benefits including the Endow Iowa Tax Credit. The Foundation exists as a trusted resource for making sure that a donor’s endowed fund will be sustained and will grow so it can continue to do good work for the long-term. The table below demonstrates a hypothetical example of how an endowment fund works. This example shows the impact of a $20,000 endowed gift as it grows over time.

How An Endowment Works

An endowed fund with the Fort Dodge Community Foundation is carefully invested for prudent return and growth so the fund will exist in perpetuity. The growth of the endowment fund and the income earned help provide grant dollars necessary to carry out the charitable objectives of the donor. Endowed funds typically have a granting policy in the range of 4-5% annually. This means that over time, an endowed fund with the Fort Dodge Community Foundation is carefully invested for prudent return and growth so the fund will exist in perpetuity. The growth of the endowment fund and the income earned help provide grant dollars necessary to carry out the charitable objectives of the donor. Endowed funds typically have a granting policy in the range of 4-5% annually. This means that over time, more grant dollars are available to the community and the endowment fund itself continues to grow. This hypothetical example is based on an endowed gift of $20,000 with an average annual growth of 6.5%.

First Year

Establish an endowment fund - $20,000 gift

Year 15

$19,000 in cumulative grants have been made; $32,000 fund balance

Year 25

$38,000 in cumulative grants; $46,000 fund balance

Year 50

$132,000 in cumulative grants; $114,000 fund balance

An endowed fund can create a vision for a better community and create a personal or family legacy that will last long after the donor’s lifetime. For more information on endowed gifts and the Endow Iowa Tax Credit, contact Randy Kuhlman, CEO of the Fort Dodge Community Foundation, at 515.573.3171 or rk@fd-foundation.org.

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