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Tax Credit: A Cents-ible Way to Give to Schools

December 6, 2007 By:
Jared Shelly, JE Feature
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Business leaders in Pennsylvania have been given a choice: Let the government decide how their tax money will be spent, or steer a chunk of it toward providing scholarship opportunities for primary-and secondary-school students.

For many, it's a no-brainer.

The Education Improvement Tax Credit Program -- set up by the state of Pennsylvania -- offers businesses a tax credit that can be used to support educational institutions. The program has led some businesses to donate large amounts of money to help support Jewish day schools and pre-kindergarten programs.

The EITC program started back in 2001, but this year, the state increased the amount available from $59 million to $75 million, an increase of more than 27 percent. That money has been split in three ways: $44.67 million to scholarship organizations, $22.33 million to support innovative public-school projects and $8 million to support pre-kindergarten programs.

Jewish groups are doing their part to encourage such contributions. In 2001, for example, the Jewish Federation of Greater Philadelphia set up the Foundation for Jewish Day Schools to help businesses allocate the tax money to benefit Jewish schools and students.

The foundation will discuss the entire process in greater detail at an 8 a.m. public breakfast seminar at the Jewish Community Services Building in Philadelphia on Tuesday, Dec. 11.

Getting the Word Out

Organizers from the foundation said they seek to draw the interest of business owners, tax advisers and accountants to get a head start for next year; applications are accepted by the Pennsylvania Department of Community and Economic Development starting on July 1.

"Unfortunately, very few business owners are aware of the tax-credit program," according to Barry R. Shevlin, who owns an investment firm in Southampton that has taken advantage of the tax credit.

Shevlin, who is also a foundation board member, said that he is most interested in exposing the program to accountants, so that they, in turn, can educate their clients in the hopes that they apply.

The EITC program offers businesses tax credits up to 75 percent of a contribution, with a maximum of $200,000 per year. If a business decides to provide the same amount for two consecutive years, it can receive a credit of up to 90 percent of the contribution.

If a business is participating in the pre-kindergarten program, it can receive a tax credit equal to 100 percent of the first $10,000 contributed and up to 90 percent of the remaining donation -- up to $100,000 annually.

Since the EITC program began in 2001, the Foundation for Jewish Day Schools has awarded more than $2.6 million in needs-based scholarships.

For the 2007-08 school year, it allocated $425,000 to more than 275 day-school students.

Since the program expanded to pre-kindergarten programs in 2003-04, the foundation has awarded some $347,035 in needs-based scholarships, including more than $120,000 to more than 85 students for the 2007-08 school year.

If accountants make themselves knowledgeable about the program, said Shevlin, it could be a good way to please clients, like himself, who are set on helping Jewish causes.

"We want to do business with the ones that understand what we want," he said, noting that the tax credit gives business leaders the chance to significantly increase a donation to a Jewish cause, without costing too much.

Once the foundation receives the tax-credit money, it is available to all qualified applicants at participating schools. Businesses can, however, donate to a specific school or pre-K program.

Families are eligible to receive a scholarship if they make less than $50,000 per year, though the program allows an additional $10,000 to be applied per dependent. This means that a family of four can reach $70,000 to qualify.

Shevlin noted that the tax-credit program couldn't help but cut down on what he sometimes sees as wasteful government spending.

"Any opportunity to structure where my taxes are spent," he remarked, "makes me feel really good inside."

 

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