Endow Wisconsin Initiative featured in Inside Philanthropy

Keep It Local: The Growing Push for State Tax Credits for Community Foundation Gifts

by: Rob McCarthy

Wisconsin is dealing with a “snowbird” problem, philanthropically speaking. Each year, upwardly mobile retirees say goodbye to their families and grandkids and leave the state temporarily. They head to the warmer climates of Florida, Alabama, or Arizona, where they'll stay for up to six months.

They settle into their communities and over time, can get connected to local institutions and causes. Inside Philanthropy has written about a number of major gifts to nonprofits in sunny places that were made by snowbirds. One effect, some up north worry, is that fewer charitable gifts are made in the snowbirds' home states.

In a response to this problem, Wisconsin’s 19 community foundations are backing a 25 percent state tax credit for charitable gifts. The tax credit is seen as an incentive for the snowbirds to keep more charitable dollars in Wisconsin. This approach seems to have worked for Iowa. Since 2004, charitable leaders say that residents there have given $191.5 million through the Endow Iowa tax credit, creating a stream of charitable donations mostly from individuals to permanent endowments.

The tax initiative in Wisconsin is timed to the post-recession recovery in individual and family incomes. The years between 2008 and 2016 were difficult on the nonprofits, which were forced to compete harder. The foundations couldn’t plug the funding gaps because a tanking economy gobbled up donors’ businesses, homes and jobs. U.S. charitable giving nationwide is improving, though it’s still not great in metropolitan places like Miami and Los Angeles, which we’ve documented before.

Wisconsin's economic recovery is steady, but uneven, and the community foundations are eager to see gains fully translate into giving. And they've watched how the tax credit worked in Iowa. The Wisconsin Philanthropy Network says the appeal is that “adoption of the tax credit has the potential to raise significant dollars for use in Wisconsin while requiring only a modest investment from the state.”

The credit under the Endow Wisconsin formula returns $1,250 to an individual or couple for an annual gift of $5,000 to a community foundation. “Philanthropy is a great thing,” says president and chief executive Jill Van Calster with the Philanthropy Network. “But philanthropy that pays the donor back is even better.”

Giving to a community foundation allows state residents to start an endowment fund or add to an existing fund. Donors become “catalysts for good today and for generations to come” is how Madison’s community foundation touts the idea. The funding mechanism to encourage legacy giving has a name, Endow Wisconsin, a web page at the Wisconsin Philanthropy Network, and words of support from the governor.

Beyond Iowa, North Dakota, Montana and Maryland have also enacted a state-tax credit for philanthropic gifts, and Minnesota, Ohio and Indiana are headed in that direction, the Wisconsin network says. Van Calster hopes to see Wisconsin added to that list.

“Generous people who live in Wisconsin will have the opportunity through the tax credit to donate to an endowment at a certified community foundation, receive a 25 percent tax credit on their Wisconsin taxes for their gift," she said, "and have the satisfaction of knowing their gift supports important causes and organizations that make our communities great."

This idea still needs buy-in from the legislature and the governor in the budget. Hopes are they'll take it up as part of the 2017-18 budget or the following year. Charitable leaders talk about the long-term gains that can come to the state. Aging Wisconsin residents are expected to pass $687 billion to their children and grandchildren in a massive wealth transfer, according to a study done a decade ago. But how much of that money will reach nonprofits in the state depends on the degree to which wealthy snowbirds put Wisconsin first. The organizers and supporters behind the Endow Wisconsin drive talk a lot about how greater local giving can play out over time. Endowments within community foundations are built to payout for decades after a gift is made.

Van Calster and the Philanthropy Network says that money that stays home will create jobs, better housing, food and nutrition, cultural centers and youth programs. “A myriad of essential services that make Wisconsin communities great,” is the message of Endow Wisconsin.

Wisconsin has a robust set of community foundations. The Greater Milwaukee Foundation launched in 1915 with a $1,000 contribution from a local banker. It’s the state’s oldest and largest community foundation. The Milwaukee funders gave $60 million last year to area-wide nonprofits, with the largest sums going toward community development and education. The lion’s share of that giving (87 percent) was directed by the donors themselves through their endowment wishes. There’s personal power in this kind of philanthropy because the donor can decide how it's spent

Community foundations are active Wisconsin in the Fox Valley Region, Chippewa County, Dunn County, North Central and Southern Wisconsin, Duluth Superior, Eau Claire, Fond du Lac, Fort Atkinson, Madison, Marshfield, Oshkosh, Racine, Stateline, Stoughton, Waukesha and Whitewater.

 

 

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