The Community Investment Tax Credit

CDC: Theory of Change with 2016 Member Data

From 2007 to 2016, MACDC Members have: Invested $4.3 billion in the Mass economy Supported 510,906 families Built or preserved 14,058 homes Created or preserved 37,316 jobs Helped 18,092 small business owners and entrepreneurs We accomplish this work by engaging nearly 2,000 community leaders each year.

Goal of the Community Investment Tax Credit (CITC) “To enable local residents and stakeholders to work with and through community development corporations to partner with nonprofit, public and private entities to improve economic opportunities for low- and moderate-income households and other residents in urban, rural and suburban communities across the Commonwealth."

CITC: The Details The CITC provides a 50% donation tax credit for qualified contributions to selected community development corporations. $3 million in tax credits in 2014 $6 million each year between 2015 and 2019. CITC donations can support a broad array of community development efforts, as determined by the local community, including: Unrestricted operating support Affordable Housing Job Development Business Development Neighborhood Revitalization Anything that is part of the CDC’s Community Investment Plan

How are CDCs selected? The Department of Housing and Community Development administers a competitive process for awarding CITC credits to CDCs. Annual NOFA, with unused credits offered on rolling basis CDCs can receive between $50,000 and $150,000 in credits Allocations are based on quality of CDC’s community investment plan

Community Investment Plans Description of service area Description of how residents shaped plan Goals Activities Evaluation methods Collaborators & partners Integration of CDC plan with larger efforts in the community Financing strategy Prior track record

Community Investment Plans For some CDCs this has been standard practice; for others it is new and challenging Pushes CDCs to focus on what the community wants, not state government Encourages “demand-driven” community development to balance “supply side”

CITC: Tax Savings Examples (Illustration - 35% Tax Bracket)   Situations vary. Consult your tax advisor. Donation $10,000 Community Investment Tax Credit $5,000 Federal Tax Deduction (35%) $3,500 Year One Tax Savings $8,500 Possible Year Two Add Back** $1,750 Net out of pocket expense $3,250 ** AMT taxpayers don’t have add back

CITC: Who can make a donation? A taxpayer is any individual or entity that makes a qualified investment and is entitled to claim the CITC. Taxpayer can be : Individual Partnership Corporation Donor Advised Funds Nonprofit organization Non-residents

CITC: Qualified investment Cash contribution to a CDC to support its community investment plan Must be the unconditional delivery of cash or mailing of a check Credit is only allowed in the taxable year the qualified investments were made Minimum qualified investment is $1,000 and maximum is $2,000,000

CITC Support Structure Community Support Organizations MACDC LISC Community Partnership Fund Operated by the United Way of Massachusetts Bay and Merrimac Valley

CITC: Collaboration & Accountability

Results so far Nearly $24 million raised in first 3 years -- In 2014, 36 CDC and 2 CSOs raised $4.7 million In 2015, 43 CDCs and 2 CSOs raised $8.2 million In 2016, 51 CDCs and 2 CSOs raised $11 million

Who are the donors? In 2014, there were 1,000 donations About 2/3 from individuals – a major new sources of funding for CDCs Over 40 banks/financial institutions participate Vast majority of donations come in Q4; 40% in December Foundations gave $1.3 million in 2015 Some national banks have declined to participate

Impact on CDCs Many CDCs have anecdotally said that CIP process was very helpful push CDCs are investing in capacity building – hiring new staff, expanding communications and fundraising staff CDCs are using it to fund new initiatives and plug holes in existing program budgets CDCs are engaging new partners and sharpening their message (i.e. their “ask”) A few non-profits have “become” CDCs to access the program

Questions?

For more info John Fitterer Director of Communications MACDC johnf@macdc.org www.macdc.org