Nonprofit organizations provide critical services and programs in our communities, from feeding and sheltering the homeless to leading youth educational and athletic programs to maintaining public parks. But for these organizations to be effective, flexible, and innovative, they need reliable sources of general operating revenue—dollars that are often the toughest to raise.
That’s where community foundations come in.
Community foundations are public charities that work with a broad range of donors to establish permanent funds that benefit the residents of a region. The Community Foundation for Southeast Michigan serves Wayne, Oakland, Macomb, Washtenaw, Monroe, Livingston and St. Clair counties, but there are 57 community foundations in Michigan serving every county in the state.
Community foundations specialize in establishing and growing endowed funds, which serve as permanent sources of charitable capital for communities. These funds can benefit a field of interest, such as the arts or health, or a specific organization. Gifts to endowed funds are invested, and each year a portion of the investment returns are available to be granted to the organizations or fields of interest the funds were established to benefit.
Nonprofits that have endowed funds can rely on grants for general operating support that they can allocate to their most pressing needs or for strategic purposes. As these funds mature, the principal grows, and total distributions eventually exceed the value of the initial gift with which they were established.
The Community Foundation for Southeast Michigan helps more than 230 organizations that are building permanent endowment with us. Examples include Livingston County Catholic Charities, Detroit PAL, Avalon Housing, Redford Township District Library, Forgotten Harvest, Literacy and Beyond, Autism Alliance of Michigan, Detroit Youth Choir, Judson Center, and Friends of the Rouge.
Between 1989 and 2012, Michigan’s Charitable Tax Credit for Community Foundations provided a 50 percent credit for donations to an endowed fund held by a community foundation certified by the State of Michigan. The credit was worth up to $200 for a couple or $100 for an individual, and up to $5,000 or 10 percent of Michigan business tax liability—whichever was less.
When the tax credit was repealed in 2012, we lost a valuable tool for engaging working families in what I like to call “kitchen table philanthropy”—the opportunity to participate in deliberate giving to causes and organizations families care about without the prerequisite of wealth. A 2014 study from the Johnson Center for Philanthropy at Grand Valley State University showed a 50 percent decrease in $400 donations and a 27.5 percent decrease in $200 donations following the repeal of the Michigan tax credit.
Sen. Sam Singh of East Lansing recently introduced S.B. 127 which would restore Michigan’s charitable tax credit, which we see as an opportunity to develop the nonprofit sector while engaging a whole new generation in charitable giving. We encourage other legislators to lend the bill their support and their vote. Together, we can grow the charitable capital available to our region.
Richard (Ric) DeVore is president of the Community Foundation for Southeast Michigan.
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