STATE TAX CREDIT GENERATES $12.8 MILLION FOR HIGH IMPACT COMMUNITY DEVELOPMENT

STATE TAX CREDIT GENERATES $12.8 MILLION FOR HIGH IMPACT COMMUNITY DEVELOPMENT

More than $12.8 million in new private philanthropy was invested in high-impact, resident-led community development in 2014 and 2015 thanks to an innovative new state tax credit, according to a report released today by Next Street Financial.  The report is the first third-party evaluation conducted of the Massachusetts Community Investment Tax Credit, a program that was signed into law in 2012 and took effect in 2014.  The report was commissioned by the Massachusetts Department of Housing and Community Development (DHCD), the Massachusetts Association of Community Development Corporations (MACDC) and the Local Initiatives Support Corporation (LISC) Boston.

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Executive Summary (PDF)

Report (PDF)

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The Community Investment Tax Credit is a 50% refundable state tax credit allocated to state-certified Community Development Corporations (CDCs) that were selected by DHCD through a competitive process to participate in the program to increase and diversify their philanthropic support. Thirty-six CDCs were selected in the program’s first year (2014) and another 14 were added in 2015.  Over the first two years of the program, the CITC attracted over 2,500 donations and $12.85 million.  The program successfully attracted 1,316 new donors to the field, including individuals, businesses, foundations and nonprofit institutions, with donations ranging from $1,000 to $500,000.  Over $5 million came from individuals – a new source of funding for many CDCs who have traditionally relied on foundations, corporations, government contracts and earned revenue.  The United Way of Massachusetts Bay and Merrimack Valley was designated as the state’s Community Partnership Fund and raised over $2.4 million for the program over those two years – nearly 1/6 of all the money generated.

“This new flexible private funding is empowering CDCs to lift their efforts to the next level,” said Joseph Kriesberg, President of the Massachusetts Association of CDCs.  “The report found that CDCs are investing these resources in community organizing, housing development, economic development, financial education and organizational capacity – all toward the goal of enabling residents to build a positive future for their families and their neighborhoods.”

In addition to the fundraising strength of the Community Investment Tax Credit, CDCs are achieving many of the program’s goals, such as deepening their organizations’ involvement in their neighborhoods and towns with new community organizing capacity and increased board engagement.  CDCs are also expanding and taking on new programs in the arts, small business assistance, health and financial counseling.  Finally, the CITC is spurring CDCs to establish new relationships with businesses, organizations and hundreds of individuals and families who may not have been aware of the CDC itself or its impact within their community.

“As a national organization with a strong local presence in Boston, we can tell you that the CITC is one of the most exciting new tools in the country for driving positive community change,” said Bob Van Meter, Executive Director of the LISC Boston office. “This tax credit is driving resources to the most effective community development groups and gives them the flexibility to design strategies and programs that are specifically tailored to the local context.  That’s incredibly valuable and unique.”

The Community Investment Tax Credit is contributing to the overall strength and substantial impact MACDC’s members are having across the Commonwealth.  In 2014 and 2015 alone, MACDC’s members invested over $1.4 billion in local communities, created or preserved 12,841 jobs, and produced or preserved 3,514 homes.  As the program continues to grow, more families will be supported, more jobs will be created and more homes will be built.

The CITC program is currently authorized through calendar year 2019, with up to $6 million in credits, representing $12 million in fundraising potential, available each year.  Donations must be between $1,000 and $2 million to qualify for the tax credit.  Many donors are also able to secure federal tax benefits for their donations.  Program advocates plan to seek legislation that will extend the program beyond 2019 and increase the credit cap in the years to come.