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The disappearance of Michigan's Community Foundation Tax Credit

The State of Michigan Community Foundation Tax Credit was abolished by Gov. Rick Snyder at the end of December 2011.  Originally signed into law Dec. 29, 1988, the Michigan Community Foundation Tax Credit was designed to encourage individuals and businesses to build the permanent endowments of community foundations across the state. This tax credit was intended to bring additional dollars to communities by generating new donors and encouraging more permanent endowment support rather than tempting donors to shift their dollars from other organizations.

The law had permitted a taxpayer to reduce their Michigan Income Tax or Michigan Business Tax liability by a credit of 50 percent of the amount contributed to a community foundation endowment fund, subject to a maximum credit of: $100 for an individual filing singly ($200 donation); $200 for a couple filing jointly ($400 donation); $5,000 or 10 percent of the tax liability before any credits (whichever is less) for a resident estate or trust (based on a $10,000 donation); or $5,000 or 5 percent of the tax liability before any credits (whichever is less) for businesses filing Michigan Income Tax returns (based on a $10,000 donation).

The Community Foundation Tax Credit was separate from, and not reduced by, the existing credits for contributions to Michigan Public Broadcasting stations, Michigan colleges and universities, and in-state public libraries, museums, municipalities and other authorized recipients.

Our hope is that future Michigan administrations realize the value of this tax credit and reinstate it so donors, through community foundations, can continue to provide support to nonprofit, tax exempt organizations that provide valuable services not available from other sources for years to come.