How does your nonprofit qualify to receive tax credit donations?

The latest view on not-for-profit accounting issues

The holiday season is usually one associated with giving as the nationwide Giving Tuesday recently passed. This day has become a major revenue raiser for charities, bringing in over $117 million in charitable donations in 2015, according to NBC. If your organization didn’t participate in Giving Tuesday or it didn’t qualify, don’t fret as a more local day of giving, Arizona Gives Day, is coming up on April 4, 2017.

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Instead of discussing the benefits and requirements for taxpayers in regard to donating to charitable organizations, this blog will cover the requirements that nonprofit organizations have to meet in order to be eligible to receive tax credit donations.

There are two types of qualifying charitable organization credits available to taxpayers for 2016. They are the credit for contributions to Qualifying Charitable Organizations (QCOs) and the credit for Qualifying Foster Care Charitable Organizations (QFCCOs). To qualify as a QCO with the Arizona Department of Revenue, your organization must meet ALL OF the following criteria:

  • Be exempt from federal income taxes under Section 501(c)(3) or be a designated agency that receives grant program monies pursuant to 42 United States Code Section 9901.
  • Provide services that meet immediate basic needs.
  • Serve Arizona residents who receive temporary assistance for needy families (TANF) benefits, are low income residents (household income is less than 150% federal poverty level) or the organization serves those who are chronically ill or physically disabled children.
  • Spend AND affirm that 50% of the budget is spent on qualified services to qualified Arizona residents.

To be considered a QFCCO, your organization must meet the criteria of a QCO plus the following two criteria:

  1. Provide ongoing services to at least 200 qualified individuals in the foster care system.
  2. Spend 50% or more of its budget on services to qualified individuals in the foster care system.

Info for Arizona Gives Day can be found here.