Several CMF members, CMF and partner organizations have worked to support bipartisan legislation that would restore the state’s Charitable Tax Credit. 

Recently, Ric DeVore, president and CEO of the Community Foundation for Southeast Michigan; Kyle Caldwell, president and CEO of CMF; and Kelley Kuhn, president and CEO of the Michigan Nonprofit Association, held a virtual press conference to bring attention to an opportunity for state lawmakers to restore the tax credit and support the vital work nonprofits lead in communities. 

Before it was eliminated as part of tax reform in 2011, the tax credit incentivized families of all income levels to donate to nonprofits, helping those organizations effectively respond to community needs.

The elimination of the tax credit on charitable giving was immediate. According to research from the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University, after the tax credit ended, from 2011 to 2013, donations of $400 dropped by 50% statewide, while donations of $200 dropped by 27.5%. 

The virtual press conference was held to encourage the Legislature to restore the tax credit by passing either Senate Bill 127 or House Bill 4531. These bills would provide a 50% tax credit for donations to endowed funds at local community foundations, with a maximum credit capped at $100 for an individual or $200 for a family.

“Our network of nonprofits across the state serves as an important safety net, complementing government programs and stepping in to help families in need with housing and food assistance, supporting mental and physical health and much more,” Kuhn said.

Kuhn highlighted recent data from Giving USA showing a 13.4% decline in individual giving from 2021 to 2022, the largest drop among all categories of giving. 

“The tax credit is really trying to incentivize giving among middle to lower-income givers to build that long-term habit of charitable giving that nonprofits need for their sustainability especially as we look at the needs of communities growing. The tax credit is not structured to build mega-donors, it is designed to build a pipeline,” Caldwell said. 

Restoring the charitable tax credit for nonprofits with endowments at community foundations allows them to grow their flexible funding to respond to community needs now and into the future. 

DeVore discussed the value of restoring the tax credit to leverage the collective power of Michigan’s community foundations and help local nonprofits establish endowed funds that provide long-term support. 

“For community foundations like ours, the restoration of the Charitable Tax Credit is an equity issue as much as it is about increasing fundraising. It unlocks access to giving incentives by allowing a donor, regardless of income, to receive a tax benefit, and having the community foundation assume the responsibility for establishing an endowment. It is an important resource for nonprofit organizations that may be smaller in asset size or have limited staff or are neighborhood-based,” DeVore said. 

House and Senate fiscal analyses estimate that restoring the tax credit will have a $3 million impact on the state budget, which would represent $6 million in local nonprofit giving to support local communities.

“The state has the resources to support this tax credit, and lawmakers can approve it knowing that they will be doubling the dollar amounts that go back to support their local communities,” Caldwell said. 

Want more?

Watch the full press conference. 

Learn more about how you can support restoring Michigan’s Charitable Tax Credit.