All charitable contributions are not alike with respect to tax advantages. Certain contributions qualify for The Neighborhood Assistance Act (NAA) Tax Credit, a Delaware state income tax credit for 50% of the amount contributed. The underlying premise for offering this credit is that a charitable program is more likely to achieve a positive impact if at least one individual and/or business owner is a personally invested stakeholder. The NAA credit also wisely leverages taxpayer dollars. For every $1 in foregone tax revenue, an eligible charitable program receives a $2 contribution.
The Delaware NAA program is overseen by the superb staff of DSHA. The process starts with an annual allocation of tax credits by the state legislature. Once the allocated credits have all been awarded to contributors the program is suspended pending an allocation for the next state year (July 1-June 30). It is not uncommon for the tax credits to be 100% spoken for well before the Delaware fiscal year ends. For this reason, I would recommend planning ahead. If a certain charitable program is near and dear to your heart and you would like to be able to be able to take advantage of this credit then speak to the charity about acquiring NAA approval ASAP.
To get started, the charity must submit general information about the organization (financials, 990, etc.) and a simple application for the program itself. (Some multi-faceted charities have numerous programs.) Once the program has been approved and a contributor identified, the charity submits another short form seeking both approval of the donation and reservation of the credits from the annual allocation.
Many states have programs which are as similar as they are different. Below find a comparison of some of the key features in place as of the date of this bog. Most of these programs are tweaked a little each year. I have also provided the current links to more information and application forms.
Name of Program:
DE Neighborhood Assistant Act Tax Credit
MD Community Investment Tax Credit
PA Neighborhood Assistance Program, Neighborhood Partnership Program
NJ Neighborhood Revitalization Tax Credit Program
VA Neighborhood Assistance Program
Websites:
DE http://www.destatehousing.com/services/ot_naa.shtml
MD http://www.neighborhoodrevitalization.org/Programs/CITC/CITC.aspx
PA http://www.newpa.com/find-and-apply-for-funding/funding-and-program-finder/funding-detail/index.aspx?progId=94
NJ http://www.state.nj.us/dca/divisions/dhcr/offices/nrtc.html
VA http://www.dss.virginia.gov/community/nap/
Entities that may contribute
DE Businesses and individuals who pay DE income taxes
MD Businesses subject to income, public service company franchise tax or the insurance premiums tax and individuals who are domiciled in MD.
PA Business firm (including pass through) authorized to conduct business in this Commonwealth and subject to income tax, bank and trust co shares tax, title insurance company franchise tax, insurance premiums tax, mutual thrift institutions tax.
NJ Individuals and C Corporations
VA Businesses and individuals who pay VA income taxes
Acceptable forms of contribution
DE cash, goods, services, or real property
MD cash, goods, or real property
PA cash
NJ cash
VA Businesses: cash, goods, stock, real property, professional services, contracting services and rent or lease of the participating nonprofit's facilities. Individuals: cash or marketable securities.
Program eligibility
DE: Provide neighborhood assistance in an impoverished area, or provide neighborhood assistance for low- and moderate-income families. This includes Community Development Corporations or Community-Based Development Organizations. Non-profits may be considered eligible if the assistance meets the NAA Program definition of a qualified purpose, including any of the following: community services; crime prevention; economic development; education; affordable housing.
MD: Project or activity that is either located in or serving a community in a Priority Funding Area. Projects must be located in or serve residents of a Priority Funding Area and typically involve activities such as: education and youth services; housing and community development; job and self-sufficiency training; enhancing neighborhoods and business districts; arts, culture and historic preservation; economic development and tourism promotion; technical assistance and capacity building; services for at-risk populations.
PA: Projects must fall under one of the following categories: Affordable housing; education; health and social services; community economic development; job training; crime prevention; and neighborhood assistance.
NJ: Nonprofit organization programs for housing and economic development in low-low/moderate income neighborhoods.
VA: Providing assistance for impoverished people. Several of the activities sponsored by the program are education, job training, housing assistance, health care clinics and community services.
% of Donation Credited
DE 50%
MD 50% (may take both charitable deduction on state form & credit)
PA 75%-80%
NJ 100%
VA 40%
Minimum/Maximum contribution per year
DE $5,000 individual/$10,000 business min and $200,000 max
MD $500 min and $500,000 max
PA $50,000/yr for 5 years min, $666,666 for one project in one year max
NJ $25,000 min and $1,000,000 max
VA $500 min & no max individual/$1,000 min & $437,500 max business
What type of taxes may be offset?
DE Income tax
MD Income tax
PA Corporate Net Income Tax, Bank and Trust Company Shares Tax, Mutual Thrift Institutions Tax, Capital Stock – Franchise Tax, Insurance Premiums Tax or Title Insurance Company Shares Tax.
NJ Corporate Business Tax, Savings Institution Act, Tax imposed on marine insurance companies, Tax imposed on insurers generally, Sewer and Water Utility Excise Tax, Petroleum Products Gross Receipts Tax
VA Income
Most Recent Annual Allocation:
DE $500,000
MD $1,000,000
PA unable to determine
NJ $10,000,000
VA unable to determine
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