Charities vie for tax check-off spots in Michigan

Friday, April 1, 2016

Editor’s note: This article was initially published in The Detroit News

Some new options are on the way for Michiganians who still feel charitable after filling their income tax forms.

Six nonprofits are competing for two open spots on next year’s Form 4642, the voluntary charity check-off that allows taxpayers to donate to organizations ranging from the Alzheimer’s Association of Michigan to the United Way.

Additions to the list must be approved through the state Legislature. Charities vying for consideration for 2016 include the Boy Scouts, Junior Achievement, Red Cross, the Lions Foundation of Michigan, a new Fostering Futures Scholarship Trust Fund that would provide college scholarships to current and former foster care students and the Prostate Cancer Understanding Prevention Screenings Fund.

By simply checking a box, taxpayers can instruct the state to automatically donate $5, $10 or more to approved charities on their tax return. If taxpayers owe the state money, the donation is added to their tax bill. Last year, voluntary contributions totaled more than $628,000, according to the Michigan Department of Treasury.

The largest amount — $101,085 — went to the Military Relief Fund, which gives grants to support families of armed service reservists or members of the Michigan National Guard called to active duty. The smallest check went to the Amber Alert Fund of Michigan, which attracted $29,655 in donations. State law limits the check-off groups to 10.

The competition doesn’t end once a charity makes the list. Nonprofits need to raise at least $50,000 for two years in a row to stay there.

Because they failed to meet that requirement, the Amber Alert Fund and the Girl Scouts of Michigan Fund don’t appear on the voluntary contributions form for the 2015 tax season. And that’s opened up two charity check-off slots on next year’s tax return.

Other nonprofits that have slipped off the voluntary contributions list in recent years include the Housing and Community Development Fund, the Renewable Fuels Fund, the Children’s Miracle Network Fund and the Children’s Hospital of Michigan Fund.

The Alzheimer’s Association joined the voluntary contributions lineup for the 2013 tax year and uses the money to pay for care and support for Alzheimer’s patients and their families, as well as care consultation and education, said Jennifer Lepard, president and CEO of the Alzheimer’s Association of Greater Michigan.

“The first year we did about $72,000 and last year we did $69,000,” Lepard said. “We’d love to hit $100,000, but we’re in good shape to stay on the list.”

A fund to benefit United Way chapters in the state took in more than $95,000 last year thanks to the check-off. Chris Perry, corporate development officer of United Way of Southeast Michigan, said the money spread through all United Way programs, including its Early Learning Communities initiative for young children.

“Every dollar that we get is helpful in doing the work that we do,” Perry said. While United Way doesn’t make an extensive effort to promote the check-off option, the organization does send email reminders to its donors about the tax donation option. “I think any way you can get the community to provide support to the nonprofit world, that’s a plus for the whole region,” Perry added.

Charities eligible for the tax check-off used to appear directly on the MI-1040 form, said Treasury spokesman Terry Stanton, but as the list grew a separate schedule was created, which taxpayers may not always see if they don’t go through their entire package of tax forms and instructions.

Taxpayers who use software to electronically file their returns may not be presented with the charity check-off option when a program walks them through their return, either.

“It was on the forms when I started in 2001 and I believe it was on there long before that,” Stanton said. Starting in 2008, “There were getting to be a number of them, such that we were going to have to go to three pages on the state income tax form. We changed over to the schedule so there could be more than three or four without expanding our state 1040.”

To be considered for the check-off donations, a nonprofit has to arrange for a bill to be sponsored and approved in the state Legislature, Stanton explained. A second bill is required to create a state fund to receive the donations, with the fund operated by an appropriate state agency to forward the money to qualifying charities.

The Veterans Tuition Grant Program, for example, is run by the state department of Military and Veterans Affairs, while the Animal Welfare Fund is doled out to local animal shelters by the Michigan Department of Agriculture and Rural Development.

The bill to add a fund for Junior Achievement is sponsored by Rep. Brandt Iden, R-Kalamazoo, who’s served on the board of his regional Junior Achievement organization. HB 4818 was approved by the state House in October, and passed out of the state Senate Finance Committee in February.

“It’s currently with the Senate, on the floor, and we’re hoping for a vote very shortly,” Iden said. “Financial literacy is always something that has been near and dear to my heart. I think making sure that our young people are educated with a financial skill-set is paramount.”

It’s after that point that the political horse-trading will begin.

“The way I’m told this traditionally works is that the House votes all of them through and the Senate does the same, and it ends up with leadership,” Iden said. “All of these will probably be voted through, and then it’s left up to them to decide who gets the two spots.”

A representative of Gov. Rick Snyder’s office said the governor wouldn’t be involved in the decision, as long as the organizations selected are legitimate charities.

Beyond getting sponsored, approved and making the cut in final negotiations, qualifying for the check-off status has no requirements in terms of a nonprofit’s mission or membership — only that once it’s on the list, it must raise enough money to qualify for inclusion each year, said the Treasury department’s Stanton.

Although, he added, “It does have to be a charitable organization. Much as I’d like to, I can’t put on the Terry Stanton Fund.”

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Check out the check-off

These state nonprofits are listed on Form 4642, the charity check-off schedule on Michigan’s state income tax. Also shown is how much each one received from tax check-off donations for the 2014 tax year. Data is as of September. * One charity listed last year, the Amber Alert Fund, raised only $29,655 and was ineligible for the 2015 tax year.

?Military Relief Fund …$101,085

?Animal Welfare Fund …$98,654

?United Way Fund …$95,201

?Children’s Trust Fund …$72,316

?Alzheimer’s Assoc. of Mich. …$69,432

?Special Olympics …$55,869

?Veterans Tuition Grant Program …$54,561

?ALS of Michigan …$52,201

?*Amber Alert of Mich. …$29,655

Source: Michigan Dept. of Treasury