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LB28 Media Release
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Phone: 402.323.7331; e-mail: maxinemoul@nebcommfound.org
June 7, 2005
Governor Signs LB 28--Tax incentive to Promote Endowed Philanthropy
LINCOLN--Governor Dave Heineman signed LB 28 into law on Thursday, June 2, after the bill was passed on a 39-4 vote by the Nebraska Legislature on Wednesday, June 1. The provisions of the bill will become effective January 1, 2006.Sen. Matt Connealy, District 16, of Decatur introduced LB 28, and 21 other Senators co-sponsored the legislation. LB 28 authorizes the development of a Nebraska charitable tax credit for irrevocable planned gifts and outright gifts to the endowments of Nebraska-based non-profits with 501(C) (3) designation from the Internal Revenue Service.
Connealy said he introduced LB 28 because, "We simply must find a way to encourage more people to make donations to charitable organizations." He said the new Nebraska tax credit will encourage Nebraskans to think first of Nebraska non-profits when they make their charitable giving decisions.
The legislation has been supported by EndowNebraska, a consortium of Nebraska based foundations and non-profit organizations. Approximately 130 Nebraska organizations and non-profits have formally endorsed the initiative. The consortium's long-term goals are to increase awareness among all Nebraskans about the potential benefits of philanthropic contributions to Nebraska's non-profit sector, its communities, and to individual and corporate taxpayers, and to increase levels of charitable giving statewide.
Modeled After Successful Montana Legislation
LB 28 is modeled after similar legislation in Montana that resulted in an additional $74 million for that state's endowments its first five years of authorization. Provisions of the Nebraska credit, which would be effective January 1, 2006, include:- a maximum annual credit of $10,000 for individual Nebraska taxpayers and corporations doing business in Nebraska and paying state corporate taxes
- a 30 percent credit for the present value of irrevocable planned gifts from individuals
- a 20 percent credit for outright gifts from corporations
- a sunset on January 1, 2010.
According to the task force, much of this wealth could be lost to federal estate taxes or to heirs residing outside the state. The task force members believe that a significant opportunity exists for Nebraska to retain some of this wealth in the form of charitable dollars that could instead go to Nebraska's community foundations and non-profit organizations.
Non-Profits Provide Many Services to Nebraskans
David Catalan, executive director of the Nonprofit Association of the Midlands, said, "Nebraska's non-profit organizations provide a broad spectrum of vital social, cultural, educational, and health related services benefiting every citizen of the state. They fill critical gaps the government sector cannot fully address without raising taxes. Non-profit organizations are restoring rural communities and urban neighborhoods, providing substance abuse counseling to teens, offering arts programs in schools, and promoting Nebraska's cultural resources."With the recent decline in charitable giving in the state and a weak economy, Catalan said the state's non-profits are facing increasing demands and expectations for their services. "We need to connect Nebraska's substantial philanthropic potential with the non-profit organizations that are so critical to our quality of life. With access to these endowed assets, nonprofits chartered and doing business in the state can build and sustain their capacity to deliver services to all residents," Catalan said.
Permanent charitable endowments can be established and utilized by non-profit organizations as a stable source of operating income, said Moul, President Emeritus of the Nebraska Community Foundation. These endowments, composed of donations of cash or stock, may be invested in interest-bearing accounts, bonds, or stocks. "The non-profit organization can utilize the income generated from the endowment to support its operating and personnel expenses and decrease the agency's dependence on funding, such as grants and annual giving campaigns, that are susceptible to shifts in the economy," said Moul.
EndowNebraska to Provide Information on LB 28 Provisions
Now that the tax credit bill has been passed by the Legislature and signed by Governor Heineman, EndowNebraska will launch a public awareness campaign to promote the credit and its impact to Nebraskans and its non-profit sector, said Moul. The EndowNebraska coalition will continue its efforts to promote Nebraska-based philanthropy. The campaign will include special efforts to connect with tax attorneys, financial advisors, bankers and others involved in estate planning. A website for EndowNebraska, with information on the provisions of LB 28 and how to use the new charitable tax credit, will be established later this year, at www.endownebraska.org.Moul cited a 2002 Rural Poll by the University of Nebraska-Lincoln to underscore the need for both education and incentives for planned giving. "In rural Nebraska," said Moul, "only four percent of those surveyed had made charitable plans for their community in their estates. We need to take decisive action now before these dollars, and those available in our urban areas, are lost forever.
For further information, contact Moul at 402-323-7331 or e-mail: maxinemoul@nebcommfound.org