Proposed bill could increase support for children-focused nonprofits (Capitol Update)

Sen. Jerry Alvord, R-Wilson, has pre-filed Senate Bill 1398, an interesting and, I believe, good bill creating the “Children’s Promise Act.” The bill would create a 100 percent tax credit, up to 50 percent of a donor’s income tax liability, for donations to tax exempt 501(c)(3) organizations whose primary mission is to provide services for one or more of the following:

1. the prevention and diversion of children from custody with the Department of Human Services (DHS),
2. the safety, care, and well-being of children in custody with DHS,
3. the express purpose of creating permanency for children through adoption,
4. the prevention of abuse, neglect, abandonment, exploitation, or trafficking of children,
5. the provision of assistance related to carrying a pregnancy to term, preventing abortion, and promoting healthy childbirth,
6. the provision of marriage preparation and marriage counseling services that encourage a permanent, lifelong union between man and wife,
7. the provision of classes to public school students that promote respect for and observance of historical and traditional fundamental values, or
8. the provision of workforce development services to children sixteen (16) years of age and older under the custody or care of DHS.

To qualify, the contribution must go to a charitable organization that:

1. maintains in this state a primary physical office or presence and that at least fifty percent (50 percent) of the clients of the organization claim to be residents of this state,
2. regularly answers a dedicated phone number,
3. in the prior tax year, did not receive more than fifty percent (50 percent) of total revenue from government grants and funding, and
4. in the prior tax year, expended one hundred percent (100 percent) of any contributions received, for which a credit was claimed pursuant to this section, to serve residents of this state.

The concept of the bill is to allow taxpayers to determine the use of up to half of their income tax by contributing to qualifying organizations. It’s sort of a “taxpayers appropriation committee.”

Instead of paying your taxes and letting the legislature and governor determine where all the money goes, you can direct up to half your taxes “off the top” by donating the money where you would like to see it spent to help children in difficult circumstances.

Obviously, if this concept were taken to an extreme with expensive tax credits for all sorts of purposes, it could eventually wreck the state budget. But use of the funding in this case couldn’t be more laudable. Many nonprofits providing these services to children suffer from lack of financial resources. In the state budgeting process children’s services often fall below priorities for other things.

One thing I might change if I were writing the bill, which I’m not, would be the provision disallowing the credit for donations to nonprofits who receive more than 50 percent of their funding from government grants.

These days many of the children’s services provided by the state are provided through public-private partnerships. The organizations struggle to provide help to all the kids who need it because they are underfunded in the legislative appropriations process. Excluding nonprofits partially funded by the state prevents allowing taxpayers to “appropriate” their tax money directly to the children’s services they think best by adding their dollars to what the state appropriates.

Other provisions could be clarified or modified, but ideally the bill will progress and be made stronger during the legislative process. Since many people hesitate to pay taxes, allowing them to choose where their tax money goes may lower resistance while benefiting children. Thanks to Sen. Alvord for the good piece of legislation.