House File 544
HOUSE FILE
BY COMMITTEE ON ECONOMIC GROWTH
(SUCCESSOR TO HSB 137)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to endow Iowa seed grants and endow Iowa tax
2 credits and including effective and retroactive applicability
3 dates.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 15E.221 SHORT TITLE.
1 2 This division shall be known as and may be cited as the
1 3 "Endow Iowa Program Act".
1 4 Sec. 2. NEW SECTION. 15E.222 PURPOSE.
1 5 The purpose of this division is to enhance the quality of
1 6 life for citizens of this state through increased
1 7 philanthropic activity by providing seed capital to citizen
1 8 groups of this state organized to establish endowment funds
1 9 that will address community needs. The purpose of this
1 10 division is also to encourage individuals, businesses, and
1 11 organizations to invest in community foundations.
1 12 Sec. 3. NEW SECTION. 15E.223 DEFINITIONS.
1 13 As used in this division, unless the context otherwise
1 14 requires:
1 15 1. "Board" means the governing board of the lead
1 16 philanthropic entity identified by the department pursuant to
1 17 section 15E.224.
1 18 2. "Business" means a business operating within the state
1 19 and includes individuals operating a sole proprietorship or
1 20 having rental, royalty, or farm income in this state and
1 21 includes a consortium of businesses.
1 22 3. "Community affiliate organization" means a group of
1 23 five or more community leaders or advocates organized for the
1 24 purpose of increasing philanthropic activity in an identified
1 25 community or geographic area in this state with the intention
1 26 of establishing a community affiliate endowment fund.
1 27 4. "Endowment gift" means an irrevocable contribution to a
1 28 permanent endowment held by a qualified community foundation.
1 29 5. "Lead philanthropic entity" means the entity identified
1 30 by the department pursuant to section 15E.224.
1 31 6. "Qualified community foundation" means a community
1 32 foundation organized or operating in this state that meets or
1 33 exceeds the national standards established by the national
1 34 council on foundations.
1 35 Sec. 4. NEW SECTION. 15E.224 ENDOW IOWA SEED GRANTS.
2 1 1. The department shall identify a lead philanthropic
2 2 entity for purposes of encouraging the development of
2 3 qualified community foundations in this state. A lead
2 4 philanthropic entity shall meet all of the following
2 5 qualifications:
2 6 a. The entity shall be a nonprofit entity which is exempt
2 7 from federal income taxation pursuant to section 501(c)(3) of
2 8 the Internal Revenue Code.
2 9 b. The entity shall be a statewide organization with
2 10 membership consisting of organizations, such as community,
2 11 corporate, and private foundations, whose principal function
2 12 is the making of grants within this state of Iowa.
2 13 c. The entity shall have a minimum of forty members and
2 14 that membership shall include qualified community foundations.
2 15 2. A lead philanthropic entity may receive a grant from
2 16 the department. The board shall use the grant moneys to award
2 17 endow Iowa seed grants to community affiliate organizations
2 18 that do all of the following:
2 19 a. Provide the board with all information required by the
2 20 board.
2 21 b. Demonstrate a dollar=for=dollar funding match in a form
2 22 approved by the board.
2 23 c. Identify a qualified community foundation to hold all
2 24 funds.
2 25 d. Provide a plan to the board demonstrating the method
2 26 for distributing grant moneys received from the board to
2 27 charities within the community or geographic area as defined
2 28 by the community affiliate organization.
2 29 3. Endow Iowa seed grants shall not exceed twenty=five
2 30 thousand dollars per community affiliate organization unless a
2 31 community affiliate organization demonstrates a multiple
2 32 county or regional approach. Endow Iowa seed grants may be
2 33 awarded on an annual basis with not more than three grants
2 34 going to one county in a fiscal year.
2 35 4. In ranking applications for grants, the board shall
3 1 consider a variety of factors including the following:
3 2 a. The demonstrated need for financial assistance to
3 3 create a community affiliate endowment fund.
3 4 b. The potential for future philanthropic activity in the
3 5 area represented by or being considered for assistance.
3 6 c. The proportion of the funding match being provided.
3 7 d. The demonstrated need for the creation of a community
3 8 affiliate endowment fund in the applicant's geographic area.
3 9 e. The identification of community needs and the manner in
3 10 which additional funding will address those needs.
3 11 f. The geographic diversity of awards.
3 12 5. Of any moneys received by a lead philanthropic entity
3 13 from the state, not more than five percent of such moneys
3 14 shall be used by the entity for administrative purposes.
3 15 Sec. 5. NEW SECTION. 15E.225 ENDOW IOWA TAX CREDIT.
3 16 1. For tax years beginning on or after January 1, 2003, a
3 17 tax credit shall be allowed against the taxes imposed in
3 18 chapter 422, divisions II, III, and V, and in chapter 432, and
3 19 against the moneys and credits tax imposed in section 533.24
3 20 equal to twenty percent of a taxpayer's endowment gift to a
3 21 qualified community foundation. An individual may claim a tax
3 22 credit under this section of a partnership, limited liability
3 23 company, S corporation, estate, or trust electing to have
3 24 income taxed directly to the individual. The amount claimed
3 25 by the individual shall be based upon the pro rata share of
3 26 the individual's earnings from the partnership, limited
3 27 liability company, S corporation, estate, or trust. A tax
3 28 credit shall be allowed only for an endowment gift made to a
3 29 qualified community foundation for a permanent endowment fund
3 30 established to benefit a charitable cause in this state. Any
3 31 tax credit in excess of the taxpayer's tax liability for the
3 32 tax year may be credited to the tax liability for the
3 33 following five years or until depleted, whichever occurs
3 34 first. A tax credit shall not be carried back to a tax prior
3 35 to the tax year in which the taxpayer claims the tax credit.
4 1 2. The aggregate amount of tax credits authorized pursuant
4 2 to this section shall not exceed a total of twenty=five
4 3 million dollars. The maximum amount of tax credits granted to
4 4 a taxpayer shall not exceed five percent of the aggregate
4 5 amount of tax credits authorized.
4 6 3. A tax credit shall not be transferable to any other
4 7 taxpayer.
4 8 4. A tax credit shall not be authorized pursuant to this
4 9 section after December 31, 2005.
4 10 5. The department shall develop a system for registration
4 11 and authorization of tax credits under this section and shall
4 12 control the distribution of all tax credits to taxpayers
4 13 providing an endowment gift subject to this section. The
4 14 department shall adopt administrative rules pursuant to
4 15 chapter 17A for the qualification and administration of
4 16 endowment gifts.
4 17 Sec. 6. NEW SECTION. 15E.226 REPORTS == AUDITS.
4 18 By January 31 of each year, the lead philanthropic entity,
4 19 in cooperation with the department, shall publish an annual
4 20 report of the activities conducted pursuant to this division
4 21 during the previous calendar year and shall submit the report
4 22 to the governor and the general assembly. The annual report
4 23 shall include a listing of endowment funds and the amount of
4 24 tax credits authorized by the department.
4 25 Sec. 7. NEW SECTION. 422.11H ENDOW IOWA TAX CREDIT.
4 26 The tax imposed under this division, less the credits
4 27 allowed under sections 422.12 and 422.12B, shall be reduced by
4 28 an endow Iowa tax credit authorized pursuant to section
4 29 15E.225.
4 30 Sec. 8. Section 422.33, Code 2003, is amended by adding
4 31 the following new subsection:
4 32 NEW SUBSECTION. 14. The taxes imposed under this division
4 33 shall be reduced by an endow Iowa tax credit authorized
4 34 pursuant to section 15E.225.
4 35 Sec. 9. Section 422.60, Code 2003, is amended by adding
5 1 the following new subsection:
5 2 NEW SUBSECTION. 7. The taxes imposed under this division
5 3 shall be reduced by an endow Iowa tax credit authorized
5 4 pursuant to section 15E.225.
5 5 Sec. 10. Section 533.24, Code 2003, is amended by adding
5 6 the following new unnumbered paragraph:
5 7 NEW UNNUMBERED PARAGRAPH. The moneys and credits tax
5 8 imposed under this section shall be reduced by an endow Iowa
5 9 tax credit authorized pursuant to section 15E.225.
5 10 Sec. 11. APPLICABILITY DATES. This Act, being deemed of
5 11 immediate importance, takes effect upon enactment and is
5 12 retroactively applicable to January 1, 2003, for tax years
5 13 beginning on or after that date.
5 14 EXPLANATION
5 15 This bill relates to endow Iowa seed grants made by a lead
5 16 philanthropic entity identified by the department of economic
5 17 development and corresponding tax credits.
5 18 The bill requires the department to identify a lead
5 19 philanthropic entity for purposes of encouraging the
5 20 development of qualified community foundations in the state.
5 21 The bill provides that a lead philanthropic entity shall be a
5 22 nonprofit entity which is exempt from federal income taxation
5 23 pursuant to section 501(c)(3) of the Internal Revenue Code; be
5 24 a statewide organization with membership consisting of
5 25 organizations, such as community, corporate, and private
5 26 foundations, whose principal function is the making of grants
5 27 within the state; and have a minimum of 40 members with that
5 28 membership including Iowa community foundations meeting the
5 29 standards established by the national council on foundations.
5 30 The bill provides that a lead philanthropic entity may
5 31 receive a grant from the department which shall be used to
5 32 award endow Iowa seed grants to community affiliate
5 33 organizations meeting certain criteria. The bill defines
5 34 "community affiliate organizations" as a group of five or more
5 35 community leaders or advocates organized for the purpose of
6 1 increasing philanthropic activity in an identified community
6 2 or geographic area in this state with the intention of
6 3 establishing a community affiliate endowment fund. The bill
6 4 provides that endow Iowa seed grants shall not exceed $25,000
6 5 per community affiliate organization unless a community
6 6 affiliate organization demonstrates a multiple county or
6 7 regional approach. The bill provides that endow Iowa seed
6 8 grants may be awarded on an annual basis with not more than
6 9 three grants going to one county in a fiscal year. The bill
6 10 limits a lead philanthropic entity to using not more than 5
6 11 percent of moneys received from the state for administrative
6 12 purposes.
6 13 The bill provides that for tax years beginning on or after
6 14 January 1, 2003, a tax credit shall be allowed against
6 15 individual and corporate income taxes, the franchise tax for
6 16 financial institutions, the insurance premium tax, and the
6 17 moneys and credits tax for credit unions equal to 20 percent
6 18 of a taxpayer's endowment gift to a qualified community
6 19 foundation. The bill provides that a tax credit shall be
6 20 allowed only for an endowment gift made to a qualified
6 21 community foundation for a permanent endowment fund
6 22 established to benefit a charitable cause in the state. The
6 23 bill provides that any tax credit in excess of the taxpayer's
6 24 tax liability for the tax year may be credited to the tax
6 25 liability for the following five years or until depleted,
6 26 whichever occurs first, and a tax credit cannot be carried
6 27 back to a tax prior to the tax year in which the taxpayer
6 28 claims the tax credit. The bill provides that the aggregate
6 29 amount of tax credits authorized shall not exceed a total of
6 30 $25 million. The bill limits the amount of tax credits
6 31 granted to a taxpayer to five percent of the aggregate amount
6 32 of tax credits authorized. The bill provides that the tax
6 33 credit shall not be transferable to any other taxpayer. The
6 34 bill provides that a tax credit shall not be authorized after
6 35 December 31, 2005. The bill requires the department to
7 1 develop a system for registration and authorization of tax
7 2 credits and to control distribution of all tax credits to
7 3 taxpayers providing an endowment gift.
7 4 The bill provides that, by January 31 of each year, the
7 5 lead philanthropic entity, in cooperation with the department,
7 6 shall publish an annual report of the activities conducted
7 7 pursuant to this division during the previous calendar year
7 8 and shall submit the report to the governor and the general
7 9 assembly.
7 10 The bill takes effect upon enactment and is retroactively
7 11 applicable to January 1, 2003, for tax years beginning on or
7 12 after that date.
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