Support Your Favorite Pennsylvania Charity
Act now to redirect your tax dollars to support an approved Pennsylvania charity. Friends of Education LLC is seeking participants for the 2023 tax year. We are currently enrolling donors.
How can I choose where to spend my tax dollars?
The Educational Improvement Tax Credit (“EITC”) program issues state tax credits to individuals and businesses who make donations to approved Pennsylvania charities. These approved charities must register with the Commonwealth as Educational Improvement Organizations (“EIOs”). A list of approved EIOs can be found here. There are nearly 900 registered EIOs with the Commonwealth.
The tax credits equal 90 percent of the contribution if claimed for two consecutive years. Donors who enroll this year are required to commit to gifts in 2023 and 2024.
To participate in this program, Pennsylvania’s EITC law requires that a participating individual contributes to a Special Purpose Entity (“SPE”). The SPE then distributes the funds to the charity of the participant’s choice.
Friends of Education makes it easy for you!
Individuals can give money to their favorite charity in the EITC program.
Friends of Education manages several SPEs with EIO EITC credits. The process is very easy. Here is an example of how this works.
The Smith family earns $300,000. Their marginal federal tax rate is 25% and they itemize on their state tax returns. They also pay $9,210 in Pennsylvania state income tax. The Smith family joins Friends of Education and makes a $10,000 donation to support the EIO charity of their choice. Friends of Education LLC writes a check for $10,000 to that charity (or those charities). The Smith family receives a state income tax credit of $9,000. The Smith family reduces its total Pennsylvania tax liability from $9,210 to $210. The Smith family also receives a charitable contribution deduction on the remaining $1,000, so they can deduct $250 from their federal return.
Below is a chart illustrating the difference if the Smith family made a charitable donation directly to a qualified organization and using the EITC Program.
Charitable donation directly to an approved EIO
EITC contribution to an approved EIO
|State Tax Credit||$0||$9,000|
|Charitable contribution deduction on Federal return|
|Total out of pocket cost||$7,500||$750|
Using the EITC program is costs the Smith family $750 to make a $10,000 donation to an approved Pennsylvania charity.
Instead of paying the Pennsylvania Treasury, the Smith family gets to direct their tax payment to the charity of their choice.