S.F. 367 Section 1. Section 15E.302, Code 2015, is amended to read 1 as follows: 2 15E.302 Purpose. 3 The purpose of this division is to enhance the quality 4 of life for citizens of this state through increased access 5 to higher education by providing scholarships and tuition 6 grants in an effort to reduce higher education costs and debt 7 burdens for the citizens of this state and through increased 8 philanthropic activity by providing capital to new and existing 9 citizen groups of this state organized to establish endowment 10 funds that will address community needs. The purpose of this 11 division is also to encourage individuals, businesses, and 12 organizations to invest in community foundations and endowed 13 scholarship funds . 14 Sec. 2. Section 15E.303, subsection 5, Code 2015, is amended 15 to read as follows: 16 5. “Endowment gift” means an irrevocable contribution to an 17 endow Iowa scholarship fund or to a permanent endowment held by 18 an endow Iowa qualified community foundation. 19 Sec. 3. Section 15E.303, Code 2015, is amended by adding the 20 following new subsections: 21 NEW SUBSECTION . 4A. “Endow Iowa scholarship fund” means 22 a fund that meets the requirements of section 15E.304A, 23 subsection 2, and that is registered with the authority 24 pursuant to that section. 25 NEW SUBSECTION . 7. “Qualified postsecondary educational 26 institution” means any of the following: 27 a. A community college established under chapter 260C. 28 b. A nonprofit accredited private institution in this state 29 that meets the requirements in section 261.9, subsection 1, 30 and the requirements of the provisions of the federal Higher 31 Education Act of 1965, as amended, for student participation in 32 the federal interest subsidy program. 33 Sec. 4. NEW SECTION . 15E.304A Endow Iowa scholarship funds. 34 1. An entity that establishes a fund meeting all of the 35 -1- LSB 1364XS (8) 86 mm/sc 1/ 6

S.F. 367 requirements of subsection 2 may register the fund with 1 the authority as the endow Iowa scholarship fund of a named 2 qualified postsecondary educational institution. The authority 3 shall not register more than one endow Iowa scholarship fund 4 per qualified postsecondary educational institution. 5 2. An endow Iowa scholarship fund shall meet all of the 6 following requirements: 7 a. The fund shall be a permanent endowment fund. 8 b. The fund shall be established by and under the control of 9 one of the following entities: 10 (1) A qualified postsecondary educational institution. 11 (2) A foundation that is organized under chapter 504, that 12 qualifies under section 501(c)(3) of the Internal Revenue Code 13 as exempt from federal income tax under section 501(a) of the 14 Internal Revenue Code, and that acts solely for the support of 15 a qualified postsecondary educational institution. 16 c. The fund shall be established and used exclusively 17 to provide scholarships or tuition grants to Iowa residents 18 attending the qualified postsecondary educational institution. 19 d. Scholarships and tuition grants shall be awarded and 20 paid exclusively from the earnings of the fund, and such 21 scholarships and tuition grants shall not exceed on an annual 22 basis an amount equal to five percent of the assets of the 23 fund. 24 Sec. 5. Section 15E.305, subsections 1 and 2, Code 2015, are 25 amended to read as follows: 26 1. For tax years beginning on or after January 1, 2003, 27 a A tax credit shall be allowed against the taxes imposed in 28 chapter 422, divisions II, III, and V , and in chapter 432 , 29 and against the moneys and credits tax imposed in section 30 533.329 equal to twenty-five percent of a taxpayer’s endowment 31 gift to an endow Iowa qualified community foundation or to an 32 endow Iowa scholarship fund . An individual may claim a tax 33 credit under this section of a partnership, limited liability 34 company, S corporation, estate, or trust electing to have 35 -2- LSB 1364XS (8) 86 mm/sc 2/ 6

S.F. 367 income taxed directly to the individual. The amount claimed 1 by the individual shall be based upon the pro rata share of the 2 individual’s earnings from the partnership, limited liability 3 company, S corporation, estate, or trust. A tax credit shall 4 be allowed only for an endowment gift made to an endow Iowa 5 scholarship fund or made to an endow Iowa qualified community 6 foundation for a permanent endowment fund established to 7 benefit a charitable cause in this state. The amount of the 8 endowment gift for which the tax credit is claimed shall not 9 be deductible in determining taxable income for state income 10 tax purposes. Any tax credit in excess of the taxpayer’s tax 11 liability for the tax year may be credited to the tax liability 12 for the following five years or until depleted, whichever 13 occurs first. A tax credit shall not be carried back to a tax 14 year prior to the tax year in which the taxpayer claims the tax 15 credit. 16 2. a. The aggregate amount of tax credits authorized 17 pursuant to this section for endowment gifts to an endow Iowa 18 qualified community foundation shall not exceed a total of six 19 million dollars annually. 20 a. b. The maximum amount of tax credits granted to a 21 taxpayer for endowment gifts to an endow Iowa qualified 22 community foundation shall not exceed five percent of the 23 aggregate amount of tax credits authorized. 24 b. c. Ten percent of the aggregate amount of tax credits 25 authorized for endowment gifts to an endow Iowa qualified 26 community foundation in a calendar year shall be reserved for 27 those endowment gifts in amounts of thirty thousand dollars 28 or less. If by September 1 of a calendar year the entire ten 29 percent of the reserved tax credits is not distributed, the 30 remaining tax credits shall be available to any other eligible 31 applicants. 32 Sec. 6. Section 15E.305, Code 2015, is amended by adding the 33 following new subsection: 34 NEW SUBSECTION . 2A. a. The aggregate amount of tax credits 35 -3- LSB 1364XS (8) 86 mm/sc 3/ 6

S.F. 367 authorized pursuant to this section for endowment gifts to an 1 endow Iowa scholarship fund shall not exceed a total of three 2 million dollars annually. 3 b. The maximum amount of tax credits granted to a taxpayer 4 for endowment gifts to an endow Iowa scholarship fund shall not 5 exceed two and one-half percent of the aggregate amount of tax 6 credits authorized. 7 c. Ten percent of the aggregate amount of tax credits 8 authorized for endowment gifts to an endow Iowa scholarship 9 fund in a calendar year shall be reserved for those endowment 10 gifts in amounts of thirty thousand dollars or less. If by 11 September 1 of a calendar year the entire ten percent of the 12 reserved tax credits is not distributed, the remaining tax 13 credits shall be available to any other eligible applicants. 14 Sec. 7. Section 22.7, subsection 52, paragraph a, 15 unnumbered paragraph 1, Code 2015, is amended to read as 16 follows: 17 The following records relating to a charitable donation made 18 to a foundation acting solely for the support of an institution 19 governed by the state board of regents, to the board of the 20 Iowa state fair foundation when the record relates to a gift 21 for deposit in or expenditure from the Iowa state fairgrounds 22 trust fund as provided in section 173.22A , to a foundation 23 acting solely for the support of an institution governed by 24 chapter 260C , to a private foundation as defined in section 25 509 of the Internal Revenue Code organized for the support of 26 a government body, or to an endow Iowa qualified community 27 foundation, as defined in section 15E.303 , organized for the 28 support of a government body , or to an endow Iowa scholarship 29 fund, as defined in section 15E.303 : 30 Sec. 8. APPLICABILITY. This Act applies to endowment gifts 31 made to an endow Iowa scholarship fund on or after July 1, 32 2015. 33 Sec. 9. RETROACTIVE APPLICABILITY. This Act applies 34 retroactively to January 1, 2015, for tax years beginning on 35 -4- LSB 1364XS (8) 86 mm/sc 4/ 6

S.F. 367 or after that date. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 This bill modifies the types of endowment gifts that 5 qualify for the endow Iowa tax credit. Under current law, 6 the endow Iowa tax credit is available for 25 percent of a 7 taxpayer’s endowment gift to an endow Iowa qualified community 8 foundation for a permanent endowment fund established to 9 benefit a charitable cause in this state. The bill allows 10 the tax credit for 25 percent of a taxpayer’s endowment gift 11 to an endow Iowa scholarship fund. In order to be an endow 12 Iowa scholarship fund and qualify for the tax credit, a fund 13 must meet several requirements. First, the fund must be a 14 permanent endowment fund. Second, the fund must be established 15 and held by a qualified postsecondary educational institution 16 or a nonprofit, tax-exempt entity acting solely for the 17 support of a qualified postsecondary educational institution. 18 “Qualified postsecondary educational institution” means an Iowa 19 community college or a nonprofit accredited private institution 20 in this state that meets certain requirements specified 21 in the bill. Third, the fund must be established and used 22 exclusively to provide scholarships or tuition grants to Iowa 23 residents attending the qualified postsecondary educational 24 institution. Fourth, the scholarships and tuition grants must 25 be paid exclusively from the earnings of the fund and must not 26 exceed five percent of the fund assets per year. The entity 27 establishing the endow Iowa scholarship fund must register the 28 fund with the economic development authority (EDA), and the EDA 29 shall not register more than one endow Iowa scholarship fund 30 per qualified postsecondary educational institution. 31 In addition to the $6 million that may be authorized per 32 calendar year under current law for endowment gifts to endow 33 Iowa qualified community foundations, the bill provides that 34 up to $3 million in tax credits may be authorized per year 35 -5- LSB 1364XS (8) 86 mm/sc 5/ 6

S.F. 367 for endowment gifts to endow Iowa scholarship funds. Of that 1 $3 million, not more than 2.5 percent ($75,000) shall be 2 granted to any one taxpayer, and 10 percent ($300,000) shall be 3 reserved for endowment gifts in amounts of $30,000 or less. If 4 by September 1 of any calendar year this entire $300,000 is not 5 distributed, the remaining amount shall be available for any 6 other endowment gift to an endow Iowa scholarship fund. 7 The bill modifies the purpose of the endow Iowa program 8 Act to include as a purpose the increased access to higher 9 education by providing scholarships and tuition grants in an 10 effort to reduce higher education costs and debt burdens for 11 the citizens of Iowa. 12 The bill adds charitable donations made to an endow Iowa 13 scholarship fund to the list of donations for which certain 14 public records shall be kept confidential under Code chapter 22 15 (examination of public records). 16 The bill applies to endowment gifts made to an endow Iowa 17 scholarship fund on or after July 1, 2015. The bill applies 18 retroactively to January 1, 2015, for tax years beginning on 19 or after that date. 20 -6- LSB 1364XS (8) 86 mm/sc 6/ 6