Eye On Illinois: Another pass at encouraging charitable donations with income tax credits

Did Invest In Kids die so Illinois Gives could live?

Last year, private school advocates blasted lawmakers for allowing the expiration of a 2017 program that created up to $75 million per year in scholarships by giving individual and corporate donors 75 cents of income tax credit per dollar donated – up to $1 million each year per filer – which they said affected 9,500 students.

While predicting the program’s demise in November, I noted state spending on public education was up more than $2 billion over the Invest In Kids lifespan, so this money didn’t hamper those efforts. But at the same time, I observed “no one has explained why a donation to a private school scholarship fund carries different incentives than contributions to things like food banks, heating assistance, homeless shelters or other important strands in the social safety net.”

Enter the Illinois Gives Tax Credit Act. According to Shaw Media’s Michelle Meyer and Bill Freskos, the idea is to raise up to $100 million over five years by offering 25% state income tax credits – up to $100,000 per filer and $5 million for the state – for donations made to a permanent endowment fund managed by a community foundation.

There are 35 community foundations in Illinois, according to the Alliance of Illinois Community Foundations (allianceilcf.org), which said its member groups manage more than $3.3 billion in assets and awarded $270 million in grants last year to nonprofit agencies across a broad spectrum of service.

Each of the state’s 35 community foundations can get no more than 15% of the $100 million, which AICF Executive Director Amanda Standerfer said should keep things equitable. It’s worth remembering the nonprofit groups that ultimately benefit from this funding increase are not just service providers but also employers. Forefront, a statewide group for nonprofit groups and foundations, said more than 50,000 nonprofit businesses employ 11% of Illinois’ overall working population.

The overall funding pool Illinois Gives creates is smaller in scope than Invest In Kids ($100 million versus $375 million) and the distribution net is wider (if 9,500 students split up $75 million per year that’s $7,900 each). Those factors combine to make this effort more politically palatable, but they also have the potential to dilute the impact.

As the program launches and expands, individual community foundations will bear the responsibility of encouraging people to make directed donations in order to qualify for their credits, and then follow up by promoting the efforts made possible through whatever is generated in order to incentivize the General Assembly to maintain or possibly expand the program as the original window closes.

Incentivizing private donations through tax credits is always popular. This effort seems well-positioned for sustainable success.

• Scott T. Holland writes about state government issues for Shaw Local News Network. Follow him on X @sth749. He can be reached at sholland@shawmedia.com.