Endowment credit up for renewal in next session

The endowment tax credit that benefits charitable donors and nonprofits, and pulls potential tax revenue from the state budget will be up for renewal in the next legislative session.

While the tax credit could take potential money away from state revenue, Cathy Cooney from the Montana Community Foundation said without the tax credit, some of Montana’s nonprofits wouldn’t get the donations they do.

“It’s going to be harder (without the credit) to build endowments in Montana,” Cooney said. “And that just means less annual operating income for most nonprofits and eventually, probably more money leaving the state.”

Cooney works out of Kalispell and is the program coordinator for MCF. She helps a number of nonprofits in the Flathead manage endowments they’ve received through MCF.

Groups like the Glacier Symphony and Chorale, the Hockaday Museum, the Bigfork Community Development Foundation, the Community Foundation for a Better Bigfork and the Bigfork Center for the Performing Arts benefit from endowments received with the tax credit in accounts managed by MCF.

The credit was enacted in 1997 as a 50 percent tax credit for anyone that donated over $5,000 into a planned investment account, that accrued interest for at least five years, to a nonprofit. The nonprofit can then spend the earnings made off of the core investment every year and have an endowment fund that in theory can last forever.

“Sort of like a charitable savings account,” Cooney said. “So it will go on forever and ever.”

In 2002 the legislature renewed the credit, but at a lower rate. It is now at a 40 percent tax credit for individuals and a 20 percent tax credit for businesses who donate at least $5,000 into endowments.

Cooney said there were endowments before the credit was inacted but not nearly as much wealth was donated. The Governor’s Tax Force on Endowments and Philanthropy has a chart on their website, www.endowmontana.org, based off numbers from the Montana Department of Revenue that shows that over $1.19 billion has been donated to endowments since 1997.

The Bigfork Center for the Performing Arts in downtown Bigfork received a sizeable donation from Flathead Bank around the time the endowment tax credit was enacted according to Walter Kuhn. He estimates it was around $180,000. Kuhn served as both president and treasurer of the performing arts board for 10 years and still serves as a board member.

The BCPA gets an earnings spending allowance every year from the MCF because of that endowment. Kuhn said others have added money to the endowment over the years, but nothing quite as substantial as the initial donation.

Kuhn said if the endowment tax credit goes away it won’t affect the performing arts center in the short run.

“But it’s always there and you never know when somone’s going to want to put in,” Kuhn said.