What is EITC?

Enacted by the Pennsylvania Legislature in 2001, the Educational Improvement Tax Credit (EITC) program authorizes tax credits for businesses that make contributions to educational improvement or scholarship organizations. The EITC is administered by Pennsylvania’s Department of Community and Economic Development (DCED).

This program is unique to Pennsylvania in that it allows businesses to make charitable contributions based on the amount of Pennsylvania state taxes they pay. A business may receive a tax credit equal to 75% of its contribution to an eligible Scholarship Organization and/or to an Educational Improvement Organization, such as Foundations, Inc., up to a maximum of $400,000 per taxable year. Tax credits may be increased to 90% of the contribution made, up to a maximum of $400,000 per taxable year, if the business agrees to provide the same amount of contribution to an organization for two consecutive years.

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What are Scholarship and Educational Improvement Organizations?

Foundations, Inc. has been designated as an eligible Educational Improvement Organization by the DCED. In order to qualify for this designation, Foundations has been recognized as providing "innovative educational programs." Specifically the Philadelphia Center for Arts and Technology (PCAT) is eligible for support through EITC.

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Why should a business participate?

The EITC program was designed to encourage Pennsylvania organizations and businesses to partner in support of local communities. Contributions made under the EITC program help community organizations continue the valuable work they do.

In addition to generating goodwill, participating Pennsylvania businesses can reduce their tax liability by supporting organizations like Foundations. Specifically, businesses are able to reduce their actual tax bill – dollar for dollar – once a tax liability has been established.

For example, a $100,000 donation generates a $75,000 tax credit. This same donation can also be claimed as a donation on federal tax returns. A net donation of $100,000 each of two consecutive years is eligible for a 90% percent tax credit or, $90,000 for each of the two years.

 

Chabad of Chester County is an approved Scholarship Organization

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