Illinois Gives Tax Credit provides 25% state income tax credit for donations to endowment funds

Those wishing to give back to their community now have even greater incentive to do so, as the Illinois Gives Tax Credit provides a 25% income tax credit for donations made to endowment funds such as the ones at the Community Foundation of Grundy County.

Julie Buck, director of the Community Foundation of Grundy County, said the program gives the foundation the opportunity to teach donors the power of endowment funds.

“The Illinois Gives Tax Credit is only for endowment funds and only through qualified community foundations – those of us who are in compliance with national standards through the Council on Foundations,” Buck said. “We’ve been in compliance with them for probably 15 years.”

“The thing I like about this law is it’s geared toward small donations, not the million-dollar donors.”

—  Julie Buck, director of the Community Foundation of Grundy County

She said it’s helpful because there’s a transfer of wealth from the Greatest Generation and baby boomers to their heirs, and those heirs don’t necessarily live where the wealth was grown.

“Grandma and grandpa, mom and dad, they grew all this wealth in Grundy County,” Buck said. “Their kids don’t live here. The estate goes to kids in other cities or states, and the money isn’t here to support Grundy County. Endowment is one way of capturing some of that wealth to improve and maintain the quality of life in Grundy County.”

Buck compared an endowment with a personal IRA. An endowment is for nonprofits, and donors put in money a little bit at a time. Over the years, it sits and accrues interest, and then when the time comes, the community foundation can pull out a bit of the endowment at a time to support the organizations.

“The thing I like about this law is it’s geared toward small donations, not the million-dollar donors,” Buck said. “For example, if someone donates $10,000 to an endowment in the state of Illinois, you get a $2,500 tax credit off your Illinois income taxes in addition to whatever you can get at the federal level.”

Buck said the tax credit can go toward any endowment except donor-advised funds.

Buck also said that the Community Foundation of Grundy County records the donation at the state level with the Illinois Department of Revenue and sends a thank you letter and general tax receipt to the donor, but the donor must have a My Illinois tax account with the Illinois Department of Revenue. Either they or their certified public accountant can set it up, and there’s procedure with a couple of tasks that have to be done by either the donor or their accountant to receive the tax credit.

The Illinois Gives Tax Credit Program started with the new year and runs until 2030.

A Shaw Media story from June 2024 said this act will support more than 60,000 nonprofit organizations. These organizations employ more than 11% of the state’s workforce.