The Endow Kentucky Tax Credit enables any Kentucky Business or individual taxpayer (individual income tax, corporation income tax and limited liability entity tax) to receive a state tax credit of up to 20% of the value of their charitable gift to a permanent endowment fund at one of the certified community foundations (limited to a credit of $10,000 per tax payer).  This limited-time opportunity is only available for fiscal years 2011 and 2012.  Each fiscal year has $500,000 in tax credits available.

Unlike a tax deduction, a credit is used to reduce the income tax liability dollar for dollar.  So, if a donor has a Kentucky income tax liability of $1,000, a donation of $5,000 through Endow Kentucky would eliminate that tax altogether (20% of $5,000 is $1,000).

What Gifts Qualify?
Gifts can be cash or appreciated stock and must be made to a qualified community foundation or affiliate foundation in Kentucky, such as the Community Improvement Foundation.  Donors may give any amount to an existing endowment at CIFoundation, such as the Community Fund, as long as its grants support Kentucky nonprofit organizations.  You also have an option to start a new endowment fund, including one that supports a rural county that is not currently serviced by a community foundation.

Overview of the Application Process:
Before making a gift, the donor must file an application with the Kentucky Department of Revenue for preliminary approval of the intended charitable gift.  If approved, the Department of Revenue will issue a preliminary approval letter.

Within 30 days of receiving the approval letter, the donor must make a contribution to an endowment fund at the Community Foundation. 

Within 10 days of making the gift, the donor must send proof of the gift to the Department of Revenue.  The Community Foundation will provide the necessary documentation, which will describe and adknowledge the gift.  The Department of Revenue will then issue their Notice of Endow Kentucky Tax Credit and Certification to the donor for attachment to their income tax return.

Are you a nonprofit looking for a way to grow - or to start - your organization's endowment?  Endow Kentucky is a great way to build your endowment program!

One nonprofit organization in Louisville mailed a letter to its top 500 donors about the new Endow Kentucky Tax Credit.  Within a few days, their local community foundation had gifts for a new endowment fund of over $30,000 and a commitment of a future gift of $20,000.  Your organization might find an effort of promoting the Endow Kentucky Tax Credit to be an effective fundraising tool as well.

Contact the Community Improvement Foundation at (270) 245-2250.  We will help you construct a letter that outlines the Endow Kentucky Tax Credit requirements.