Tax credit program bill makes nonprofits nervous

A bill aimed at forcing future legislatures to review the effectiveness of some tax credit programs is making some local nonprofit organizations nervous.

Senate Bill 367, which sets expiration dates in the next few years for several of the state’s tax credit programs, has concerned some nonprofit leaders who fear losing critical sources of revenue.

“It could be a really terrible thing for neighborhoods in general,” said Elaine Guinn, executive director of New Hope Family Shelter in Bloomington.

“This comes at a time when funding is being cut in every direction.”

New Hope provides shelter and services to families experiencing homelessness in Monroe County. The program relies on Indiana’s Neighborhood Assistance Program, which distributes credits to nonprofits that aid disadvantaged populations.

These credits can be purchased by donors in exchange for tax credits, worth half the value of the donation. A $100  donation would allow for a $50 tax deduction through NAP.

But Sen. Brandt Hershman, R-Wheatfield, who authored the bill, said eliminating tax credit programs such as NAP is far from his goal.

“This is a means to require a periodic review and reauthorization,” Hershman said.

“If you actually look at the bill, it’s designed to sunset everything to force the General Assembly to look at them.”

The legislation ends the NAP and other income tax credits in 2016 or 2017, depending on when they were last reviewed and reauthorized — 2012 or 2013, respectively. It has passed the Senate and will be heard by a House of Representatives committee on Monday.

“I’m a big fan of sunset legislation to require you to go back,” Hershman said. “It is completely unrealistic that we would eliminate all these credits.”

The last set of reviews, he said, resulted in some programs being scaled back or eliminated completely, while others were expanded if they were deemed successful.

Statewide, NAP offers $2.5 million in tax credits, or $5 million in charitable giving each year, according to its website. The maximum value of NAP credits that can be distributed to a nonprofit for sale is $50,000.

Last year, New Hope was allocated $16,000 in credits. For them, there’s $32,000 at risk.

“We sold ours within about a week,” Guinn said. “I think we did get a pretty decent amount last year.”

But, Guinn said, any money counts for a nonprofit that brought in $156,833 in 2011, according to its IRS Form 990. Board President Jim Riley said 70 percent of the organization’s funding comes from private donors.

That is why staff and directors at New Hope are concerned by even the possibility that NAP could not be reauthorized in 2017.

“Any amount of money we lose, it affects us,” she said. “That’s why it’s critical to us.”