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Charities team up to raise awareness of state tax credit program

BISMARCK -- Several North Dakota charitable foundations are investing $100,000 in a campaign to raise awareness of a tax credit program they say is underused and to increase charitable giving overall.

"It's one of the most generous tax credits in the nation and people don't think anything of it," Tim Beaton, executive director of the Fargo Moorhead Area Foundation, said Thursday. "There are many directors of nonprofits that are not taking advantage of it because they don't know about it."

Beaton was referring to the endowment fund income tax credit. It allows businesses and individuals a 40 percent tax credit on qualifying donations.

Beaton, along with community foundation leaders from Minot, Grand Forks, Devils Lake and the North Dakota Community Foundation, launched the awareness campaign, "NDgives," Thursday.

The campaign's website,, includes a list of eligible endowments and other information.

Here is how the tax credit works:

A business, estate, trust or financial institution that pays income tax and is located in North Dakota can receive a 40 percent credit up to a total of $10,000 in contributions to a qualified endowment fund of a qualified North Dakota charity.

Individuals may receive a 40 percent state tax credit for a contribution for $5,000 or more, with a maximum credit of $10,000 per year per taxpayer, or $20,000 per year per couple filing jointly.

For instance, an individual contributing $5,000 with a 28 percent tax rate on his or her return will receive a $2,000 state income tax credit. That same donation is worth an estimated $1,400 in federal tax savings, making the person's $5,000 contribution seem like only $1,600, according to the campaign.

The tax credit was created by the state Legislature in 2007, but only for businesses, trusts and estates. In 2011, lawmakers expanded the credit to all individuals paying income tax in North Dakota.

Ken Kitzman, president of the Minot Area Community Foundation, emphasized how a tax credit is better than a tax deduction, which is often advertised as a benefit for contributing to a nonprofit organization.

A deduction is taken off an individual's adjusted income when filing taxes, whereas the tax credit comes off the amount of income tax an individual owes.

For both an individual and business, the credit may be carried forward for three additional tax years if it cannot all be used in one year.

"No matter how you slice the pie, it is a significant savings to anyone looking to do some good throughout the state," said Bill Gross, president and founder of Farm Rescue, a nonprofit that provides planting and harvesting assistance to farm families that have experienced a major injury, illness or natural disaster.

Gross said Thursday that Farm Rescue has benefitted from the tax credit, and the collaborative effort of NDgives is "a wonderful and much needed campaign."

He said combining the campaign and its push to promote the tax credit "is a real avenue towards creating lasting legacies and doing a lot more good throughout the state."

Nonprofits wanting to set up an endowment eligible for the tax credit can consult with the state tax department or the Internal Revenue Service for help.

On top of raising awareness of the tax credit, the campaign is encouraging more North Dakotans to donate.

North Dakota is ranked 17th in adjusted gross income but 48th in charitable giving, Kitzman said.

"We are known for our generosity, we are giving people, but stats don't show that in all matters," Kitzman said. "The nature of our state is very conservative individuals who are very caring, but it's hard to let go of those dollars."

Mike Nowatzki

Mike Nowatzki reports for Forum News Service. He can be reached at (701) 255-5607.