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N.D. provides new charitable tax break

A new law encourages North Dakota businesses to make gifts to qualified charitable endowments. "North Dakota is one of only a handful of states with this tax credit, and we're very pleased to have it," said Michael Hannaher, director of developme...

A new law encourages North Dakota businesses to make gifts to qualified charitable endowments.

"North Dakota is one of only a handful of states with this tax credit, and we're very pleased to have it," said Michael Hannaher, director of development for the nonprofit Fargo-Moorhead Area Foundation.

The bill, approved by legislators this spring and recently signed into law by Gov. John Hoeven, provides an income tax credit to businesses that make qualified gifts.

Businesses are allowed a tax credit of up to 40 percent of the value of a gift to a qualified charitable endowment, up to a maximum of $10,000 per year, Hannaher said.

Anything in excess of $10,000 can be used going forward for three years.

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"This is not a charitable deduction - it's a credit, which comes right off the business' tax bill," Hannaher said.

Minnesota is not among the half-dozen states with such a credit, he said.

Sen. Tim Mathern, D-Fargo, one of the sponsors of the tax credit legislation, said the credit will help businesses tackle areas of social need that government might not be able to address.

Kevin Dvorak, president and chief executive officer of the nonprofit North Dakota Community Foundation in Bismarck, said the new tax credit will spur giving that helps over a long period of time.

"Endowments can do so much good," he said.

In an endowment, a charitable contribution is invested and over time can grow greatly, making it more beneficial than a contribution that's spent at once.

Hannaher said endowments have been a popular topic in the charitable field since Warren Buffet's donation last year to the Bill and Melinda Gates Foundation.

The billionaire investor donated stock valued at about $31 billion to increase the foundation's endowment.

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Dvorak said the new credit might not spark much immediate giving because businesses already have made plans for the year.

But the credit will come into play when businesses began planning for next year, he said.

Readers can reach Forum reporter Jonathan Knutson at (701) 241-5530

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