Michigan Nonprofit Association Blog

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Reinstating tax credits for charitable giving remains key for nonprofit sector in 2016

Written by:  Jayson Bussa, MiBiz

Lifting what essentially proved to be a chokehold on charitable giving remains one of the primary policy issues that statewide nonprofit executives will focus on in 2016.

Armed with proof that repealing longstanding charitable giving tax credits in 2011 has hindered giving across the state, advocates are laboring to bring them back.

A bill to reinstate the charitable tax credits for donations to community foundations, homeless shelters, food banks and public entities was approved unanimously with no proposed changes by the Senate Finance Committee earlier in the month and now awaits its fate.

“That would be a wonderful gift to replace and restore those (credits), which were such an important demonstration of the private and public partnership that makes our nonprofit sector so robust in Michigan,” said Rob Collier, president and CEO of the Council of Michigan Foundations. “Obviously, we’re interested in supporting that package of bills.”

The credits were a casualty of a massive state tax reform bill introduced in 2011 under Gov. Rick Snyder while facing a $1.5 billion budget deficit. Michigan residents could receive up to $100 individually for their charitable offerings to the aforementioned entities and $200 as a couple.

The credits were costing the state $35 million at the time they were repealed, but they were a catalyst for giving. Once repealed, Collier said the impact became evident.

“When we first lost the credits, one of the problems was that we didn’t have data to measure the impact,” Collier said. “They had been around for 20 years and we were just sort of taking advantage of them. 

“The (Dorothy A.) Johnson Center (For Philanthropy) did some research and what we realized — and now we had the data — was that it really demonstrated that the credit was successful in providing a pipeline of new donors. I remember when we first put them in place with Gov. Engler — we wanted everyone in Michigan to feel like they could be a philanthropist. By taking them away, we saw a dramatic drop in first-time donors.”

Joan Bowman of the Michigan Nonprofit Association (MNA) agreed with the importance of reinstating the tax credits.

“Anytime you can help the work nonprofits do and give hard-working Michiganders a tax break, it’s a good thing,” she said.

Bowman serves as the senior director of public affairs and communications for MNA, which strives to support the sector in a number of ways, including advocating for the laws that allow nonprofits to best serve the needs of their communities.

The Michigan Nonprofit Association focuses on statewide policy, and for good reason — that’s where the vast majority of laws are passed that influence charitable nonprofits.

To underscore the importance of state and local public policy efforts, the National Council of Nonprofits highlighted that in 2014 alone, Congress passed 224 laws while 28,574 were passed by state legislatures.

Bowman said that when it comes to statewide concerns, the organization keys in on tax policy, budget and spending issues and private-public collaboration.

Budget and spending is a general area of concern for Bowman and the nonprofit sector as a whole this year, given the increased pressures on the state budget brought on by expensive needs with Detroit Public Schools and the Flint water crisis in addition to the recent plans for road funding.

“Budget and spending decisions always have immediate and serious consequences,” Bowman said. “This year is even more critical than ever because the pressures on the budget seem to be growing. 

“We’ll be monitoring it to make sure what consequences all of those bills might have on taking money away from other departments that fund the nonprofit sector.”

Collier and the Council of Michigan Foundations will, as it does every other year, work with research firm Public Sector Consultants to analyze the impact of nonprofits in each county and district in an effort to help shape public policy.

“We will do a new update this year and that data is really helpful,” Collier said. “We can show a legislator — we can pull up their county and district and say, ‘This is how many nonprofits are in your area and they have this many employees and this is their payroll.’ For many policymakers, that’s an a-ha moment.” 

Sidebar: Policy - Nonprofit

  • CHARITABLE TAX CREDIT — In 2011, a large state tax reform bill killed a credit offered to Michigan residents who made donations to community foundations, homeless shelters, food banks and public entities. Leaders in the nonprofit sector said that the move dealt a serious blow to charitable giving. But recently, the Senate Finance Committee approved legislation to restore these tax credits. The bill was introduced by Sen. Tonya Schuitmaker (R-Lawton), Sen. Patrick Colbeck (R-Canton Township) and Sen. Goeff Hansen (R-Hart) and is awaiting action.
  • AGENCY FUNDS — Legislation is currently in the works that would allow local units of government, public schools and libraries to transfer income from the sale of assets to create agency funds at community foundations. The legislation, which is currently being drafted, already has bipartisan backing and support within the nonprofit sector.
  • BUDGET PINCH — State budget and spending decisions always have immediate and serious consequences for the nonprofit sector, but this year could prove to be even more critical as pressures on the budget continue to grow. Leaders in the nonprofit sector were already wary of the potential impact brought on by the road funding legislation as the state budget now faces additional pressures from Detroit Public Schools and the Flint water crisis.
  • TAX-EXEMPT PROPERTY — With a growing number of cases concerning this issue appearing in front of the state tax tribunal, some nonprofit executives expect to see legislation developed that addresses the process between property tax exemptions and charitable nonprofits. Sources say there needs to better communication between organizations and local assessors in order for the organizations to get the tax breaks to which they are entitled.