Certified Community Development Corporations allow you to do good while getting some of your money back
Over the 17 years that I’ve been the CEO of Homes of Hope, I’ve had a dream. But it’s not the dream you would guess – one of reaching more people or doing more good. Those dreams are real, but the dream I have is to give donors their money back.
It has long been my belief that the generous community of Greenville would support nonprofit community and economic development work in far greater measure than the state or federal government ever could if given the opportunity to invest instead of to donate. This is my dream – a dream now possible thanks to a designation called the Certified Community Development Corporation (CDC).
With this designation, those certified organizations have the ability to offer a person or corporation a return both of, and on, their money. And with this, part two of that dream: the lessening of dependency on the government for community and economic development work in our area.
If I’ve piqued your interest, first let me tell you about an additional return on investment beyond the financial part. Then I’ll tell you how it all works.
The additional return would be the “social impact” of your investment. One that hopefully turns your ROI into a “home run” as you realize not just a financial reward, but the realization that you have played a significant part in impacting our community to make it better.
Through the work of our area CDCs, including one Certified Community Development Finance Institution (CDFI), we have witnessed life change beyond the tangible, meaning the work of these groups goes beyond handouts or the meeting of basic human needs, into building relationships with families and individuals, to link arms with them, walking beside them to help break generational cycles of poverty, reduce neighborhood crime rates and increase investment in our community through their newfound economic participation.
Some of this looks like housing with financial wellness training as an added component. Some of this looks like micro-lending programs helping folks start new businesses and become entrepreneurial. Some of it looks like employing people who had no hope of employment for multiple reasons, now trained and equipped to re-enter the job market, only this time with marketable skills. Some of it is even as basic as families formerly living in survival mode, now working off a budget, building savings and having disposable income to contribute to our economy.
Life change is so much better than just “helping folks.” This is the social impact I’m referring to.
So, how can you invest instead of donate?
First, being a certified Community Development Corporation means those organizations have an S.C. income tax credit to offer investors and donors. This credit is in addition to the normal tax deduction that is offered to taxpayers who itemize their deductions.
An example of a donation would be: An investor who is in a 30 percent federal tax bracket, and 7 percent state bracket, donates to a Certified CDC. This investor would qualify for 37 percent of his or her income to be deducted off their tax return – plus an additional 33 percent would be credited off their S.C. income tax bill. This equals a total of 70 percent coming back to the investor. Not a bad deal for a donation.
Now, what about an investment? While I can’t speak for all Certified CDCs and CDFIs, I can speak for my own organization and tell you that we offer a promissory note at 2 percent interest, with a 10-year term, in addition to the 33 percent credit, as a return on investment in our housing development. This is offered to accredited investors and only at minimum $25,000 increments. We certainly also offer the credit for smaller amounts that are donated, and the requirement for accredited investors does not apply there.
For the other organizations in our area, you’ll have to check with each of them for their programs. You can find a list of these organizations at bit.ly/SC-CDC.
Investing as opposed to donating allows you to have the social impact that you normally only associate with donations, and get your money back, too – with a return.
My dream is being realized as many others have already invested, but we need more investors to help allocate the remainder of this year’s credits still available. If you can’t invest, but would like to help anyway through a donation, the tax credit would still be added to your normal tax deduction.
If you’d like to know more, I’m available. Please contact me at [email protected] and let’s sit down and discuss this. Ours is but one of many great organizations in our area that are doing excellent and impactful work, and are fully equipped to offer you this opportunity for meaningful returns on your investment dollar.