Finance and Administration Cabinet
Endow Kentucky tax credits intended to encourage donations to community foundations
FRANKFORT, Ky. (April 28, 2011) — Through the Endow Kentucky Program, philanthropists who donate money to permanent endowment funds of qualified community foundations may be eligible for a 20 percent income tax credit up to $10,000 per donor per taxable year.
The Endow Kentucky Program, along with the Endow Kentucky Commission, was established during the 2010 Regular Legislative Session with the approval of Senate Bill 227. Endow Kentucky was created in an effort to increase philanthropic activity to support communities across the Commonwealth.
The Endow Kentucky tax credit was subsequently established during the 2010 Extraordinary Session in House Bill 2. As part of the initiative, the General Assembly authorized $500,000 per fiscal year in tax credits for income and limited liability entity taxpayers making an endowment gift to community foundations throughout the state that have been certified by the Commission. To view a list of the six approved community foundations and to learn about county-specific component funds or affiliate community foundations, visit http://dlg.ky.gov/Endow+Kentucky.htm.
To apply, a taxpayer must file an application for preliminary authorization of the tax credit with the Department of Revenue (DOR). After review of the application, DOR issues preliminary approval and the taxpayer then has 30 days to make the contribution. Within 10 days of making the contribution, the taxpayer must send proof of the contribution to DOR, where final approval is awarded. The credit may be taken against individual income tax, corporate income tax and the limited liability entity tax. The tax credit may be carried forward for up to five years.
Since taking effect Jan. 1, 2011, $176,900 has been awarded in tax credits, leaving $323,100 available for approved applicants this fiscal year through June 30, 2011. Another $500,000 will become available beginning July 1, 2011.
To qualify as an eligible recipient, community foundations must be in compliance with the national standards established by the National Council on Foundations, classified as a 501c3 tax-exempt organization by the Internal Revenue Service (IRS) and certified by the Endow Kentucky Commission.
Instructions and an application for preliminary approval may be found online at http://www.revenue.ky.gov/endowedkytaxcredit.htm. For questions or for more information about the Endow Kentucky Program tax credits, call 502-564-8139 or email KRC.WEBResponseEconomicDevelopmentCredits@ky.gov.