Fla Lewis, the principal of Weybosset Research and Management in Providence, is donating about $22,000 a year for two years to one of five scholarship-granting organizations, and getting a 90 percent tax credit for the gift.
Like 75 other businesses in Rhode Island, Lewis applied to participate in a lottery this year for $1.5 million in tax credits provided to companies who donate to the organizations, or SGOs. He chose Scholarships to Economically Poor Students, which disburses award money to students at four schools: Community Preparatory School, San Miguel School, Sophia Academy and Grace School.
When the lottery was held in July, 56 companies received the benefit – 36 new companies and the rest who already had two-year commitments – because the money runs out as lottery donations are awarded, said David M. Sullivan, tax administrator for the Division of Taxation in the R.I. Department of Revenue, and Dan Corley, president of the Rhode Island Scholarship Alliance.
The state program to provide tax credits for contributions to scholarship-granting organizations has made available $1 million each year since it started in 2006. But for fiscal 2014, through legislation enacted by the General Assembly and signed by the governor, $1.5 million was made available, said Neil Downing, chief revenue agent at the R.I. Division of Taxation.
Businesses apply by July 1 and can give a maximum of up to $111,111 a year. They are then assigned a number in the lottery, and tax credits are allocated during the summertime drawing until the money runs out. For a one-year commitment, the donor gets a 75 percent tax credit; two-year commitments earn a 90 percent tax credit, he added.
The lottery system is “transparent” and the “fairest way to do it,” Downing said.
Lewis explained that he prefers to see his contribution go to students who need it in order to attend a private elementary or secondary school instead of going into “state coffers” as taxes.
Estate and Corporate Income Taxes are changing next year, and business owners and executives should know the details. The PBN Summit on November 6th will provide those details and more - including how much Obamacare's Employer Mandate could cost.
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