A new system for charitable giving, which combines opportunity to give with something everyone does annually — file taxes, is set to go into effect in 2019 for the filing year of 2020, according to Renny Fagan, president and CEO of the Colorado Nonprofit Association. He spoke at a recent meeting in Montrose for local nonprofits hosted by the Montrose Community Foundation.
With this new giving opportunity, taxpayer donors will be able to designate their donation on the Voluntary Contributions Schedule for 2019, which will be deducted from their refund.
“I am most excited that this tax refund line item has the potential to be a new and different revenue stream for local nonprofits, apart from fundraising events and appeal mailings,” said Sara Plumhoff, executive director of the Montrose Community Foundation. “Additionally, I hope that donors will take advantage of the donation option because it will be easy and convenient for the donors.”
“Every donation can make a difference,” Fagan said. “About 70 percent of Montrose County taxpayers receive an average refund of about $560,” he said. “This will significantly impact both Colorado nonprofits and donor tax payers.”
Colorado is the first state in the country to implement this charitable giving system.
There are over 250 nonprofits in the Montrose area and 3,100 nonprofits in the more rural Northwest Region of the state, of which Montrose is a part. This small number of regional nonprofits generates $2.6 billion in revenues, spend $1.7 billion and support 16,299 jobs in the region. There are 23,147 nonprofits in Colorado with a $40 billion impact on the state economy, according to the recent Colorado Nonprofit Economic Impact Report.
For every $1 million spent, the nonprofit sector creates 10 jobs, while the private sector creates 7 jobs. The impact of rural nonprofits on local communities is greater than on the Front Range.
Qualifying nonprofits will soon be able to register with the Colorado Secretary of State and receive an identification number, which taxpayers will be able to list on the Voluntary Contributions Schedule. This does not go into effect until the 2019 tax season begins in early 2020.
Nonprofits are encouraged to start planning now to get on the registry. Last year $1.9 million went to only 20 organizations with few local nonprofits listed. In 2020, the list will increase as nonprofits from all over the state register.
To qualify, a nonprofit must be in good standing with the State of Colorado, be a federal 501(c)(3) charity, have $25,000 in annual income, and be registered for five years as a charitable solicitation organization with the State of Colorado.
Fagan also explained another reason this is a landmark law for Colorado: “No tax payer dollars were used in the start up of this law, $400,000 was donated by the following Colorado trusts and foundations: Anschutz Family Foundation, Boettcher Foundation, Bohemian Foundation, Buell Foundation, The Colorado Health Foundation, The Colorado Trust, The Denver Foundation, El Pomar Foundation, Mile High United Way, and the Morgridge Family Foundation. A public information campaign is planned for January 2020.
“I want to recognize and thank the Colorado Nonprofit Association and their partners involved in getting this bill passed,” Plumhoff said. “They found a line item on the tax form which turned into what will hopefully be a profitable opportunity for local nonprofits and nonprofits throughout the state.”
The Colorado Nonprofit Association was instrumental in getting this law passed on the first attempt with the support of Governor Hickenlooper.
“The Montrose Community Foundation will continue to work closely with the Colorado Nonprofit Association to make sure that our local nonprofits will receive updates about next year’s tax refund opportunity. We look forward to sharing the messaging and promotional Tool Kits that will help our nonprofits get the word out to their donors,” said Plumhoff.
Arlyn Macdonald is a freelance writer for the Montrose Daily Press and author of four books.