Education donations could lose tax credit

Businesses and individuals who donate to public school foundations, such as the Boise Public Schools Foundation, might lose a tax credit if an amended bill makes its way through the Statehouse.

An Idaho law, which expires this year, has awarded tax credits for charitable contributions to nine entities and education foundations. But an attempt to make the law permanent — with amended language — is mired in confusion and controversy.

Scott New
Rep. Heather Scott

Rep. Heather Scott, R-Blanchard, wants to maintain tax credits for contributions that go directly to public schools (as well as libraries and museums). However, she extracted language in House Bill 45 that has also granted tax credits to contributions to foundations. Many school districts have foundations, including Boise, Caldwell, Nampa, McCall, Blaine County, Idaho Falls and Lake Pend Oreille.

“The problem is a foundation could market this credit but there is no accountability for its donated money and it’s hurting schools,” Scott said. “The law allows for a huge loophole.”

Scott wants the tax credit to return to those who contribute directly to a school but not a “third party, nonprofit.” This language could apply to foundations.

That’s where the confusion comes in.

Scott wasn’t clear on Wednesday which entities would be affected by the amendment, even though she is proposing the change. She was confident it would apply to donation to the Panhandle Alliance for Education, a North Idaho endowment that contributes to the Lake Pend Oreille School District that sits in her legislative District 1.

“I only have the one example,” she said.

Idaho Education News asked Scott if her amendment would apply to other foundations. She said she didn’t know and the first-year lawmaker admitted she didn’t know there were so many other public education foundations.

“Boise has one?” she asked. The Boise Public Schools Foundation contributes $2 million a year to Boise schools.

She also said she had no idea how many tax credits have been awarded to donors, and how that affects the state general fund. She said she was waiting to hear back from staff at the Idaho Tax Commission.

The Idaho School Boards Association is opposing the amendment, since it could impact all education foundations.

“We have indicated that we cannot live with the edits she wants,” said ISBA Executive Director Karen Echeverria.

Jennifer Henderson, executive director of the Boise Public Schools Foundation, Scott wants to strike language that was included to make sure all education foundation donations were eligible for the tax credit.

“There is now a danger that some foundations would be excluded,” Henderson said. “I’m unclear as to the concerns as to why they are taking the language out. We operate under tremendous oversight as a nonprofit.”

Panhandle Alliance Executive Director Marcia Wilson said Thursday she was not familiar with Scott’s amendment, but said “having the education tax credit is a tremendous benefit and we just want it to stay because it’s good for schools.”

Scott said there is not enough oversight for third-party nonprofits. Awarding tax credits takes money from the general fund and therefore takes money from education.

“Removing this language takes out potential for fraud and abuse,” Scott said. “These foundations can do great things but I know of one that spends 15 percent of donations on administration costs.”

The law allows Idaho taxpayers to claim a credit worth 50 percent of a gift — up to $1,000 for Idahoans filing joint returns, or $500 for single filers.

Scott said she thinks Revenue and Taxation Committee members will support her amended legislation. But the committee’s chairman, Rep. Gary Collins, R-Nampa, said he is “getting additional information” and that Scott’s proposal is not necessarily the one the committee will approve.

“The reason the legislation had a sunset is so we can take a look at it, so we’re taking a look at it,” Collins said. He also said he expects the bill to surface in his committee next week.

Echeverria has been working with some of the benefiting entities to get the sunset removed and make the law permanent.

“We thought it would be a slam dunk,” she said.

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