Who are the donors that receive EITC and OSTC tax credits? There are many different types of donors but they all have one thing in common. All donors pay some type of Pennsylvania tax as a business entity. The donors are not a mystery because each year the DCED compiles a new list of donors in an excel spreadsheet and will release this list by email if you call one of the EITC specialists. Donors come in many different types,sizes and kinds of Pennsylvania business taxpayers. Donor's patterns have changed over time. Pennsylvania tax credit donors need to have a patient, well thought out strategy and excellent communication to consistently succeed in obtaining tax credits in return for gifts to the donors chosen charity. Good communication between the donor business, the donor's CFO, the donor's tax accountant, the business owners and the receiving charity are key to a successful donation.
The donor list includes many banks, large companies especially in Pittsburgh and Philadelphia and many small businesses. The donors prefer to help private schools or nonprofits that have public school improvement programs. There are donors that may have been encouraged to give by a particular charity or school. Some donors give many small donations to lots of schools and charities in their businesses service area especially banks. Some out of state large businesses that do business in Pennsylvania and pay tax in Pennsylvania are donors. Some examples of well know companies who donate include Aetna, EQT, PNC Bank, M&T Bank and Staples.
Donor's patterns have changed over time. With the addition of small business pass thru entities the number of small business donors have significantly increased. With the advent of the electronic application versus the one page paper application some donors have left and some new ones have appeared. With the early application on May 15th being allowed for all existing donors it's much harder for a new donor to get established. The education improvement organizations (EIO) are the most popular and are typically fully subscribed on May 15th by second year applications which get the first shot at these credits. A new organization called a special purpose entity is starting to allow individuals who are accredited investors and business employees to apply for tax credits and make donations in 2015.
Pennsylvania tax credit donors need to have a patient, well thought out strategy and excellent communication to consistently succeed in obtaining tax credits in return for gifts to the donors chosen charity. Donors to EIOs may need to alternate years between scholarship organizations (SO) and EIOs to stay in the donor pool and not get a rejection letter. Donors applying late or new donors may need to participate in the OSTC program which has the most tax credit availability because it's the newest program. Our charity can help with swapping between tax credit programs when the donor is not in the catagory they prefer and we can help with the communication and execution of the tax credit application on the right day to maximize the chances of successfully receiving a tax credit award letter allowing a donation.
Good communication between the donor business, the donor's CFO, the donor's tax accountant, the business owners and the receiving charity are key to a successful donation. The main reason donors fail to stay in the program or get wait list letters from DCED is a lack of communication between the business's people. Once the donor business decides how much they want to give usually with the help of the CFO then a timely application must be made many times by the charity or CFO. Once the award letter is received a check needs to go to the charity. The charity needs to issue a thank you letter and this letter needs registered with the DCED. The tax accountant at year end must use the credit and many times pass the credit thru to individual owners. This process is then repeated in the second year of a two year commitment. Our charity helps with the regular annual coordination of this tax credit paperwork process and communicating among the company participants.
