The Endow Iowa program began in 2003 with an aim of capturing a percentage of the state’s transfer of wealth to support Iowa communities now and in the future. Without question, the program has been a huge success and a model for growing community-based endowments.
Since the inception of the Endow Iowa Tax Credit program, Iowa community foundations have leveraged more than $336 million in permanent endowment fund gifts. The contributions were made through 43,564 donations. The beauty of endowment funds is that these dollars will continue to grow in perpetuity, improving lives for Iowans both now and for generations to come. Last year alone, Endow Iowa funds at Iowa community foundations granted over $20 million to nonprofits and charitable causes in the state. Endow Iowa tax credits are awarded on a first-come, first-served basis to donors who make a gift to a permanent endowment fund, established for the benefit of an Iowa charitable cause, at a qualified community foundation in Iowa.
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Qualified community foundations are those accredited by National Standards for U.S. Community Foundations. The program is utilized by a wide range of donors, including individuals and businesses, with a majority of donations being $1,000 or less. The program began when the state legislature made $2 million in tax credits available. Demand for the tax credits has grown each year and since 2013, $6 million has been available annually through this program. Iowa community foundations have reached a challenging point in being able to realize the program’s full potential. The program is so successful that the credits are exhausted earlier and earlier each year. All 2020 credits were allocated before the end of 2019; all 2021 credits were allocated by December 2020; and all 2022 credits were allocated via a waitlist by September 2021.
As a result, all Endow Iowa tax credit applications submitted from September 2021 on will be added to the 2023 waitlist. Without legislative action, we anticipate Endow Iowa tax credit applications being added to the 2024 waitlist as early as the first quarter of 2022.
Of course, this demand is a good problem. Iowans are investing in endowed funds at record rates in Iowa, but now they are waiting up to two years to realize this tax advantage. In order for this program to remain effective, the state legislature should increase the annual allocation from $6 million per year to $10 million per year. For each public tax credit dollar allocated, four private philanthropy dollars are leveraged. Those funds are making an incredible impact in each county in Iowa. One example right here in Pottawattamie County is through the Meighan McCarthy Johansen Hope Fund.
Meighan McCarthy Johansen passed away on February 28, 2013, at the age of 29 from a nearly two-year courageous battle with cervical cancer. The McCarthy family was blessed with an outpouring of generosity from family, friends and community members during Meighan’s radiation and chemotherapy treatments at Methodist Hospital in Omaha and during the experimental therapy at MD Anderson Cancer Center in Houston, Texas. When Meighan passed away, parents Deb and Jerry knew they wanted to honor their eldest daughter’s memory by giving back to the community that had offered them so much love and support.
Jerry and Deb initially considered a scholarship in Meighan’s name since she was a teacher. However, after learning about PCCF and meeting with staff to discuss their options, they decided to create the Meighan McCarthy Johansen Hope Fund — a donor advised fund — in 2014. Jerry and Deb liked how flexible, convenient and simple it was to meet their goal of creating a larger impact in our community.
Since 2015, the Meighan McCarthy Johansen Hope Fund has distributed 33 grants totaling over $17,000. The fund has impacted the city of Avoca and surrounding communities. Meighan’s mother, Deb, appreciates the personal approach to giving the community foundation and donor advised fund creates.
She shared: “Our partnership with PCCF has been extremely rewarding. We appreciate the knowledge and support of their staff in enabling us to keep Meighan’s memory alive, while supporting worthy organizations that impact children’s lives.”
Every year, Iowans invest millions of philanthropic dollars in our state to ensure that the most compelling and urgent needs facing our communities are being met. Families like the McCarthys make a tangible difference toward long-term impact, and the Endow Iowa program is a wonderful and truly innovative way to incentivize charitable investments and reinforce the impact created. We are fortunate to live in a state that values philanthropy.
Without an increase to the annual allocation, the growing waitlist will continue to compound in future years and Iowa communities may miss out on endowed gifts that could benefit their communities forever. This program not only benefits Iowa donors, but also the nonprofits, charitable causes and communities they love. We hope the Legislature will see the continued value of this program and re-commit to the program’s goals with an increase in Endow Iowa funds for the future.