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 Endow Iowa Tax Credit
State Endowment Fund Legislation Endow Iowa was created to allow new and innovative opportunities for donors to enhance the quality of life for the citizens of Iowa. Through an increase in philanthropic activity, by encouraging contributions from individuals, businesses, and organizations to new and existing community foundations across the state. Endow Iowa was a project created through official legislation in 2003.
To be eligible to receive a 25% Endow Iowa tax credit, charitable gifts must be made:
- To a "qualified" community foundation (Fort Dodge Community Foundation and United Way is a qualified community foundation).
- To a permanent endowment fund. An endowed fund can be started at the Fort Dodge Community Foundation for as little as $5,000.
- For the benefit of one or more Iowa charitable causes.
- By individuals, corporations, or financial institutions.
The Tax Credit
- Is 25% of the gift amount in addition to federal income tax deductions for charitable gifts.
- Also allows any excess credit not used in the authorized tax year may be carried forward for up to five additional tax years.
- Is issued on a "first come, first serve" basis with a total of $4 million in tax credits available.
Example Contribution of $10,000:
(a) Endow Iowa Tax Credit: $2,500
(b) Net Federal Deduction: $10,000
(c) Federal Tax Rate: 35%
(d) Federal Tax Savings: $3,500
Total Tax Savings: $6,000
Net Cost of Gift: $4,000
(a) 25% of the charitable gift made to a permanently endowed fund at a community foundation - maximum annual Endow Iowa tax credit per taxpayer is $100,000.
(b) The entire amount of the gift is deductible on federal taxes. Individual marginal tax rates vary.
(c) Assumes that individual taxpayer utilizes Schedule A.
(d) Itemized deductions on a federal tax return.
County Endowment Fund Leglislation
Another of the State of Iowa’s efforts to promote philanthropy is the County Endowment Fund legislation (HF 2302, 2004 legislation) passed in 2005. Currently this bill provides that eight-tenths of one percent of the state’s gambling revenue will be distributed to the counties in Iowa that do not have gambling entities. These funds will be deposited and distributed through qualified community foundations such as the Fort Dodge Community Foundation and United Way or affiliates of qualified community foundations that meet national standards and address county-wide needs.
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