Charitable giving in Illinois has been declining in recent years, driven by economic uncertainty, donor skepticism and broader national trends. Among those trends, high inflation has reduced donors’ disposable income. As a result, nearly 74% of Illinois nonprofits report job vacancies, and many have longer waitlisted for services. Inevitably. staffing shortages limit nonprofits’ outreach capacity, which can further depress giving.
But Illinois is doing something about the problem. The Illinois Gives Tax Credit Program offers a 25 percent income tax credit to individuals and businesses that contribute to permanent endowed funds held by Qualified Community Foundations (QCFs) which themselves are exempt from tax under Section 501(c)(3) of the Internal Revenue Code.
A permanent endowment is a fund which is kept in perpetuity, with only its earnings providing regular operating support and funding for charitable projects. Other than investing, the holding foundation may not use any of the money from the initial donations. Instead, the foundation are to use the earnings it receives from the investment of the initial donation to support its projects and operations.
To qualify for the Illinois Gives Tax Credit Program, the permanent endowment funds must:
The Illinois Department of Revenue can issue up to $5 million in tax credits per calendar year (25% of the $20 million maximum donation amount). IDOR can issue up to $100,000 in tax credits per taxpayer per calendar year (25% of the $400,000 maximum donation amount made by a single taxpayer eligible for credits under the program); and up to $750,000 in tax credits per calendar year (25% of the $3 million maximum donation amount made to a single QCF eligible for credits under the program) as a result of contributions made to a single QCF.