By now, you may have heard about a unique opportunity for Kentucky donors in the form of a tax benefit.
The Endow Kentucky program offers a tax credit to donors who establish an endowment fund or contribute to an existing one. Each year, the state offers $1 million in tax credits to Kentucky individuals or businesses that enable them to receive a state tax credit of 20 percent of a charitable gift up to $50,000 invested in a permanent endowment fund.
Unlike tax deductions, tax credits are taken off your tax bill dollar for dollar and up to $10,000 in tax credits is available to each taxpayer each year. This credit is in addition to the federal charitable tax deduction and the tax credit can be carried forward for up to five years. For example, a gift of $50,000 to a qualifying endowment fund could end up costing the donor only half that amount or less.
So, what’s the catch? The fund must benefit Kentucky nonprofit organizations and charitable initiatives, and the fund must be with a certified community foundation, such as Central Kentucky Community Foundation serving a nine-county region of Breckinridge, Grayson, Hardin, Hart, LaRue, Marion, Meade, Nelson and Washington counties. That’s it.
With that said, there is a sense of urgency to apply for the Endow Kentucky tax credits. A new allotment of tax credits become available each year on July 1 and historically are depleted the same day. The credits are available on a first come, first serve basis. In order to secure your credit, applications for the Endow Kentucky tax credit are due to Central Kentucky Community Foundation’s office by June 28. You can download an application at http://ckcf4people.org/giving/endow-kentucky/.
Although the tax credit is a wonderful benefit to establishing or contributing to an endowment fund, it is not the only benefit.
An endowment is a permanently restricted fund which is managed to preserve the purchasing power of the original investment perpetually. In other words, an endowment fund is a way to carry out your charitable priorities forever.
When you create an endowment for a designated purpose, it provides an assurance that programs important to you survive in the wake of change. When the fund is established, the community foundation and the nonprofit organization carries out your expressed wishes.
And because your endowment gift will be invested permanently, your gift lasts forever. It ensures what matters to you continues for future generations.
By establishing the endowment fund with Central Kentucky Community Foundation, it alleviates the burden of management. CKCF handles all investment, reporting and disbursement of the fund. By establishing your fund with us, it comes with assurances that causes and organizations important to you will be supported in their missions through your gift forever.
The endowment fund also provides benefit for the nonprofit organizations or causes it supports. For the organization, the fund creates an ongoing source of income, relieves pressure on the annual fund, allows for program expansion and innovation, builds a pipeline for and encourages future gifts, and provides a measure of independence from economic, governmental and political forces.
Add to that the stability and longevity an endowment fund not only provides to the nonprofit organization but to a community foundation and you have a recipe for success when it comes to carrying out your philanthropic wishes forever.
Best of all, giving for the sake of giving just feels good.
And if making an endowment gift isn’t in your immediate future but an option for your estate, our Give Five initiative can help you.
So, “Let’s Do Something Good Today” and establish your legacy through an endowment fund with Central Kentucky Community Foundation. Together, we can make a forever difference for our community.