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Explaining the Community Investment Tax Credit for Foundations

Post date: 
August 19th, 2014
Article Type: 
AGM Blog Post

A new state tax credit taking effect in 2014 provides foundations, individuals and corporations with an unprecedented opportunity to deepen the impact of their philanthropy.  The Community Investment Tax Credit (CITC)  is designed to encourage individuals, companies, foundations, and others to donate to highly effective organizations that are helping to expand economic opportunities for families and communities across the state.  These organizations, called Community Development Corporations, enable local residents to come together and take concrete steps to improve their communities by building affordable housing, renovating dilapidated properties, starting and growing local businesses, helping families build financial knowledge and capacity, and otherwise improving the quality of life in their community. What’s more, emerging research is demonstrating that effective community development can improve community and public health, increase educational attainment, reduce violence and crime, and promote environmental sustainability.  This means that donors with a wide range of philanthropic motivations might be interested in the CITC.

The CITC was enacted in 2012 and took effect earlier this year when the state allocated $3 million in tax credits to 38 organizations across the state.  These tax credits allow donors to receive a 50% tax credit for every dollar donated to these selected organizations: Give $10,000 and receive a $5,000 tax credit on your Massachusetts state taxes.  And if you don’t have any tax liability, you can get a refund! This means that Donor Advised Funds and Foundations can participate as well, with the 50% refund (or rebate) being deposited back into the Fund or the Foundation for future giving.  The Mass. Department of Revenue has just released its regulations which explain how different entities can claim the credit.

Foundations with specific geographic areas of focus can target their donations to CDCs serving those areas. Foundations with specific programmatic priorities can target their donations to CDCs which advance those priorities. And foundations that want to support the entire sector can donate to the United Way’s Community Partnership Fund that is aggregating donations on behalf of the entire sector. In each case, state government will effectively match your donation dollar for dollar.

The CITC will generate a total of $6 million for high-impact, resident-led community development in 2014 and twice that amount in 2015 and beyond when the tax credit cap is extended to $6 million annually.  The scale and structure of this exciting new program provides a great opportunity for Individuals, foundations and corporations to work with the best CDCs in the state to improve our communities. 

For more information, contact Joe Kriesberg or John Fitterer at MACDC or Susan Dickason at the United Way.

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