Federal, state tax deadline shift doesn't include charitable credit extension
Nonprofits report fewer donations, more need as pandemic unfolds
Arizona nonprofit leaders are sounding a collective alarm as the Arizona charitable tax credit deadline provided to aid qualified nonprofit organizations did not move with recent federal tax deadline extensions.
Qualifying charitable organizations, one of two tax credit programs providing a dollar-to-dollar match, includes 501(c)3 nonprofit organizations, foster care organizations public schools, and certified school tuition organizations.
“Every nonprofit faces an uncertain future,” said Dan Shufelt, founder and CEO of Phoenix-based Arizona Helping Hands, in a statement to Independent Newsmedia pointing out the dramatic, immediate impact the novel coronavirus is having on outreach organizations.
“Funding is key to our ability to continue to our work providing essential needs to Arizona’s most vulnerable population --- boys and girls in foster care. I have grave concerns about how America will support charities through, and after, this crisis. The economic downturn, the dramatic increase in unemployment and potential changes in the philosophy of charitable foundations regarding funding decisions all place a gray cloud over the future.”
Arizona Helping Hands is the largest provider of essential needs for children in the Arizona Foster Care System, according to Mr. Shufelt. But donations this year at the 501(c)3 nonprofit organization, as a global pandemic unfolds, are down more than 30% year to date.
Earlier this month, President Donald Trump announced that individuals and businesses are now allowed to delay filing and paying federal tax bills for 90 days as part of an emergency relief plan amid the novel coronavirus pandemic.
The new filing date nationwide is July 15. However, with that change, a legislative act at the Arizona capitol would have to occur for the Arizona charitable tax credit deadline to be extended as well.
In mid-March, the Arizona Department of Revenue confirmed the April 15 deadline and outlined the state’s two separate tax credits for individuals who make contributions to charitable organizations:
- One is meant for donations to Qualifying Charitable Organizations; and
- The second for donations to Qualifying Foster Care Charitable Organizations.
For tax year 2019, the maximum credit for Qualifying Charitable Organizations is $400 for a single person/head of household and $800 for a married couple filing jointly; while for Qualifying Foster Care Charitable Organizations, the maximum credit is $500 for single person/head of household and $1,000 for a married couple filing joint.
A recipe for dire needs to emerge
The confusion that could arise around the changing of tax filing dates may create dire situations for Arizona nonprofits large and small, according to Kristen Merrifield, CEO of Arizona Alliance of Nonprofits.
“In Arizona, the charitable tax credit --- there are four of them --- are established by statute and we would need to have a legislative change to move the tax credit deadline,” she explained. “That is not going to get done given the immediate severity of everything that is going on. Donors would still have to make these charitable contributions by April 15 to take advantage of that for the previous tax year.”
A local charitable group, the Scottsdale Charros report significant changes to give is already anticipated.
“This could be significant,” said Charros Executive Director Dennis Robbins.
“If most people believe that their tax returns and tax payments are now due on July 15 but the Arizona tax credits are due on April 15 it will cause confusion and many nonprofits will be missed this year. I’m hopeful that people will still give regardless of which year the tax credit applies. We have an amazingly generous community and most people will not care which year their credit can be used.”
--- Dennis Robbins
For nearly 60 years, the Scottsdale Charros have been in constant pursuit of improving the lives of Scottsdale residents and all children while preserving the community’s ties to its western heritage.
For the Scottsdale Charros, the fuel for their grant program, which is delegated by The Charro Foundation, is spring training baseball, Mr. Robbins points out.
“Spring training games were canceled with almost 40% of the games yet to be played,” he said. “We are in the process of processing refunds to our customers for the missed games. Our ability to give this year has been severely hampered by the early termination of spring training.”
Mr. Robbins contends the Arizona charitable tax credit program is vital funding.
“We rely on the Arizona tax credit program to supplement the donations to our local charities,” he said. “We act as a pass-through so that our charities can be helped even more. Only 11% of Arizona taxpayers take advantage of the tax credit program. It is an easy way to make sure your state tax dollars are used to support your favorite charity.”
The Arizona Department of Revenue reports charitable tax credit claims for the last three filing years are:
- Tax year 2018: 152,010
- Tax year 2017: 165,525
- Tax year 2016: 148,703
Ms. Merrifield contends millions of dollars of tax credit donations statewide --- necessary fuel for social service, charitable organizations --- are at-risk.
“The alliance, early on, the week before last, conducted a statewide survey and we had about 450 responses and those respondents projected a collective, initial loss of $36 million,” she pointed out of data as of March 23.
“It is both a decline of fundraising, and it is also that they are reporting increases in expenses of $5.6 million because a lot of them are on the front lines during this pandemic. It is very serious and we are trying to raise awareness.”
Ms. Merrifield says the situation evolved quickly, seemingly overnight.
“Nonprofits are scrappy and have a knack for making things work, but this happened literally overnight and the tax credits are needed to provide critical services,” she said. “Nonprofits have a longer tail of recovery because everyone is experiencing a decrease in revenue across the board in all sectors.”
--- Kristen Merrifield
But in addition to the Arizona charitable tax credit program, the Arizona Alliance of Nonprofits is hosting Arizona Gives Day Tuesday, April 7.
Ms. Merrifield reports that additional steps have been taken to expand support through the upcoming Arizona Gives Day 24-hour online fundraising campaign, a collaboration with Arizona Grantmakers Forum and presented by FirstBank, on April 7, including:
- An Emergency Relief Fund giving donors the option to increase donations as an add-on at check out or through direct donation at www.azgives.org/aznonprofits. All funds will be distributed equally among participating nonprofits.
- Re-opening registration to allow organizations that had to cancel fundraisers, programs and other events that originally chose not to participate to be able to benefit from the fundraiser.
- A group of donors has provided separate funding enabling the alliance to waive payment-processing fees normally paid by nonprofits participating in Arizona Gives Day.
Ms. Merrifield contends once re-registration was opened for the Arizona Gives Day event, about 200 more nonprofits signed up. Ms. Merrifield estimates there are 22,000 to 23,000 nonprofit entities throughout Arizona.
Nonprofits: no small feat
Mr. Shufelt has penned guest commentaries and open letters encouraging both communication of the tax-credit deadline debacle and where those dollars have gone in previous years.
“The Arizona Foster Care Tax Credit has created the opportunity for Arizona taxpayers to support our work at no cost to them,” he said. “This dollar-for-dollar tax credit is the driving force behind our phenomenal growth in service to the kids.”
Mr. Shufelt explains the staggering impact of his organization, Arizona Helping Hands.
“In 2019, we provided twin beds to 2,582 boys and girls, cribs to 978 babies, birthday packages to 3,596, home safety items to 860 families and back-to-school supplies to 6,500 children in the state’s foster care system --- to name but a few of our accomplishments,” he said.
--- Dan Shufelt
“Without the support of individuals using their foster care tax credit dollars, none of this would have been possible. Children in foster care would today be fighting over whose turn it was for the sofa tonight and who had to sleep on the floor.”
Mr. Shufelt says the unintended consequences of a lack of attention to detail could be detrimental to doing the good he does in the world.
“There are a significant number of unintended consequences of the tax law changes adopted by the state,” he said. “This could have an enormous impact on our revenue and our ability to continue serving Arizona’s boys and girls in foster care.”