Legislation was introduced today in both houses of the Minnesota State Legislature to enact the Endow Minnesota tax credit. The bill encourages individual giving to permanent endowment funds at community foundations and has the potential to make $120 million¹ per year in new monies available to support community and economic development projects across the state.
Approximately $47.9 billion in wealth will be transferred from one generation of Minnesotans to the next by 2030². Keeping some of these assets in Minnesota communities represents the opportunity of a generation, and Endow Minnesota provides a tool to do it.
Community foundations are publicly supported nonprofit organizations operated by and for the benefit of specific communities or geographic areas. Community foundation endowments are permanent funds that preserve contributions as principal and invest earnings back into the community.
The Endow Minnesota tax credit encourages Minnesotans to invest in their home towns, so the communities endure as places where future generations continue to want to live, work and thrive.
Those contributing to permanent endowment funds of local community foundations would receive a 25% tax credit for gifts between $5,000 and $100,000 annually. (Thus, gifts of $5,000 would result in a $1,250 credit, and so on.) Up to $3 million in tax credits would be awarded annually, and the Endow Minnesota tax credit would expire after 15 years.
Incentives to promote giving to permanent endowments have worked elsewhere, including in Iowa where giving to community foundation endowments has grown by more than 200% since a 2004 inception.
Specific examples from around Minnesota follow:
Central Minnesota Community Foundation, St. Cloud
Central Minnesota Community Foundation (with affiliate foundations serving Alexandria, Brainerd Lakes and Willmar) convenes residents to work on community problems and connects people and resources to build better communities. Collectively, in the last year, these foundations generated more than $21 million in private support for worthy causes and gave more than $6 million to organizations serving the community. One great example in St. Cloud is the foundation’s active engagement in and leadership of the Greater St. Cloud Community Priorities initiative.
“Community foundations harness the power of private philanthropy to improve the communities they serve. Local donors have the opportunity to leave a lasting legacy that will impact their communities for generations to come,” says Steve Joul, president, Central Minnesota Community Foundation. “This is especially important for rural communities, as their economies continue to experience change.”
Duluth Superior Area Community Foundation
Duluth Superior Area Community Foundation funds NorthForce, a program that links young talent to employers in northeast Minnesota and northwest Wisconsin. It encourages the best and the brightest young people to create careers and lives in the area, and it gives employers access to talented employees. Providing workforce and professional development resources, NorthForce is designed to be the area’s go-to career tool for 18- to 35-year-olds.
“Because of the significant growth in job opportunities in the Duluth area, connecting young adults with local employers is critically important,” says Holly C. Sampson, president, Duluth Superior Area Community Foundation. “The human resources of TwinPortsConnex and the electronic connections of NorthForce are creating new opportunities for our economy.”
Fargo-Moorhead Area Foundation
Fargo-Moorhead Area Foundation is funding a new initiative at the YWCA called Nontraditional Employment for Women (NEW), which provides education and employment to previously unemployed women living in the Y’s shelter or transitional housing. Interested women receive training in a nontraditional field that interests them, such as welding or manufacturing, which increases their incomes and their ability to support their families. In addition to covering tuition, the grant also provides for transportation and childcare, barriers that otherwise can keep women from furthering their education or finding employment.
“Community foundations across Minnesota work in partnership with their communities to create stronger, more vibrant places to live and work,” says Tim Beaton, executive director, Fargo-Moorhead Area Foundation. “The Endow Minnesota tax credit gives Minnesotans an opportunity to make a greater impact by contributing to endowments that provide support to nonprofits, like the YWCA, in perpetuity.”
Rochester Area Foundation
Rochester Area Foundation recognizes that ownership, stability and a sense of pride are core values critical to a successful community. To foster that success, it helps new residents put down roots in the area with its First Homes initiative, which works to ensure an adequate supply of affordable starter homes for working families. Since 2001, First Homes has provided access to housing for over 1,000 households.
“As a community adds jobs, it must also add housing,” says JoAnn Stormer, president, Rochester Area Foundation. “Affordable housing is essential and helps us provide a steady workforce and more secure families.”
1. This is a conservative estimate. If only 5% of the projected $47.9 billion in MN wealth transfer is placed in permanent endowments held by community foundations, $2.4 billion will be set aside as permanent community assets, translating into approximately $120 million in new grants annually.
2. Minnesota Generational Transfer of Wealth study