The Endow Iowa tax credit program began in 2003 to capture a percentage of the state’s transfer of wealth to support Iowa communities now and in the future. Without question, the program has been a huge success and a model for growing community-based endowments that enable nonprofits to provide essential services.
However, its success has become its biggest challenge. Increases in charitable giving coupled with demand for credits have resulted in tax credits being expended earlier and earlier each year — often before the new year begins. Our state Legislature needs to invest in this program to deepen the impact of community-based philanthropy across Iowa.
Since the program’s inception, Iowa community foundations have leveraged more than $336 million in permanent endowment gifts, representing 43,564 donations. The beauty of endowments is that these dollars grow in perpetuity, improving lives now and for generations to come. Last year alone, Endow Iowa funds at Iowa community foundations granted over
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$20 million to nonprofits and charitable causes in the state.
Endow Iowa tax credits are awarded on a first-come, first-served basis to donors who make a gift to a permanent endowment, established for the benefit of an Iowa charitable cause, at a qualified community foundation in Iowa, such as the Community Foundation of Greater Dubuque. Various donors use the program, with most donations being $1,000 or less. When the program began, the Legislature made $2 million in credits available. Demand has grown, and since 2013, $6 million has been available annually.
Iowa community foundations have reached a challenging point in realizing the program’s potential. It is so successful that credits are exhausted earlier and earlier. All 2020 credits were allocated before the end of 2019; 2021 credits were allocated by December 2020; and 2022 credits were allocated via waitlist by September 2021.
As a result, applications submitted since September 2021 will be added to the 2023 waitlist. Without legislative action, we anticipate applications being added to the 2024 waitlist as early as the first quarter of 2022.
This demand is a good problem. Iowans are investing in endowments at record rates, but they are waiting up to two years to realize this tax advantage. For this program to remain effective, the Iowa Legislature should increase the annual allocation from $6 million to $10 million. For each public tax credit dollar allocated, four private philanthropy dollars are leveraged. Those funds are making incredible impact in each Iowa county.
Nonprofits across the Dubuque region — and the people they serve — are positively impacted by Endow Iowa because they have established nearly 300 endowment funds hosted by the Community Foundation of Greater Dubuque.
For example, Crescent Community Health Center’s endowment enables the organization to provide essential medical services to people who lack access to insurance; the Dubuque Dream Center’s endowment supports its capacity to prepare youth for success and strengthen families; and Camp Courageous of Iowa’s endowment has grown to help expand recreational and respite care opportunities for people with special needs.
Because of Endow Iowa, charitable giving to endowments like these becomes more attractive to generous people who want to strengthen the Dubuque region. Organizations benefit from an increase in giving, while donors receive a tax benefit for their support. It’s a win-win.
Without an increase to the annual allocation, this problem will continue to compound, and Iowa communities may miss out on gifts that benefit their communities forever. This program not only benefits Iowa donors, but also the nonprofits, charitable causes and communities they love. We hope the Legislature will see the continued value of this program and re-commit to its goals with an increase in Endow Iowa funds for the future.
Nancy Van Milligen is president and CEO of the Community Foundation of Greater Dubuque. Learn more about the organization at dbqfoundation.org.
Kari McCann Boutell is president of the Iowa Council of Foundations, a statewide membership association of foundations and grantmaking organizations across Iowa. The ICoF’s mission is to strengthen and grow philanthropy in Iowa. Endow Iowa is administered by the Iowa Economic Development Authority in collaboration with the ICoF. Since 2004, the ICoF has served as the state’s Lead Philanthropic Entity.
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