Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 13, 1994 TAG: 9403110012
SECTION: BUSINESS PAGE: D1 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Long
Under the Neighborhood Assistance Act Program, the contribution is not limited to gifts of money.
Mark Grigsby, who administers the program for the Virginia A Department of Social Services, told of a car dealer who called about two surplus autos he was willing to give away.
Grigsby matched the gift with a need. The agencies gained transportation, while the dealer was able to write off half the value of his contribution. Tax credits also may be taken for materials, the value of employees' time donated for services and other resources, provided there is appropriate verification.
Last year, the state granted tax credits of $5.25 million, Grigsby said. That means the agencies profited from gifts of $10.5 million through the program.
Grigsby said the tax credits, which are written off directly from the bottom line of taxes due, are in addition to other deductions.
Thus, Grigsby said, a business that gives $1,000 gets state tax credits of $500. Then it can also take a deduction for $1,000 on both state and federal income tax returns.
Ted Edlich, executive director of Total Action Against Poverty in Roanoke, said the tax inducement has helped in countless small ways, but also in three major projects.
Once was after the 1985 flooding left many Roanoke Valley families without anything. Business contributed furnishings and heaters.
The 50 percent tax credit also helped TAP convince The Kroger Co. to donate a building at 19th Street and Melrose Avenue N.W., formerly one of its supermarkets, for a new community grocery, Edlich said.
More recently, the tax credits came into play for a TAP-related housing effort. Crestar Bank donated homes out of its inventory of repossessed houses to help shelter families in the Roanoke Valley.
Peggy Balla, executive director of the Child Health Investment Partnership, said her group used virtually all of its $50,000 available credits last year for cash and in-kind donations from Blue Cross/Blue Shield. Each agency has an annual dollar limit of credits it can give in exchange for donations.
At the Bradley Free Clinic of Roanoke Valley, a spokeswoman said that the tax credit is an encouragement for gifts, an "added perspective" for potential donors in some instances.
Grigsby said about 300 agencies statewide are on the approved list for assistance.
To land on the approved list, he said, an agency must be a neighborhood organization helping impoverished people, defined as those living on income at or below 125 percent of the federal poverty level.
Even though it's a government program, Grigsby said there's a minimum of paperwork. There is a one-page form that is filled out partly by the charity and partly by the donor. It is sent to the state Department of Social Services, which forwards a certificate for attachment to tax returns.
If the donation is money, the canceled check is sufficient verification of value. Otherwise, the agency must provide proof of the value of the contribution.
Businesses may take a maximum of $175,000 in neighborhood assistance tax credits for any tax year, which would represent a donation worth $350,000. The minimum tax credit is $50, representing a $100 gift.
The law allows extra tax credits to be carried over for the next five tax years.
The act mentions projects in education, job training, crime prevention and community services.
Flexible guidelines allow local groups and businesses to design specific community programs. Examples include child-care centers, job training centers, cultural programs for art, music, dance and drama, winterization of homes of the elderly and handicapped, and renovation of older neighborhoods.
The state encourages partnerships between the business and agency in defining the problem and designing local solutions.
There are 10 Roanoke Valley agencies qualified to grant tax credits under the program: Bradley Free Clinic of Roanoke Valley, Child Health Investment Partnership, Family Service of Roanoke Valley, Inner City Athletic Association, Legal Aid Society of Roanoke Valley, Project Discovery of Virginia Inc., Total Action Against Poverty, Virginia CARES Inc., Virginia Water Project Inc. and West End Center for Youth Inc.
Only businesses, not individuals, can take advantage of the tax credit. The act defines a business as an entity authorized to do business in Virginia and subject to the state income tax on net corporation income.
Or a business can be a public service company subject to a franchise or license tax on gross receipts, or a bank, trust company, insurance company, thrift, partnership, S corporation or sole proprietorship.
Grigsby said lawyers and some other professionals can donate their services, but tax laws effectively exclude doctors from providing medical assistance.
The state said that improved community relations, enhanced public image, increased visibility and tax credits "are all potential advantages of participating in the program."
"In addition, the Neighborhood Assistance Program can be used as a public relations vehicle," the state literature said.
"As a participant in neighborhood assistance projects, a business has the option of playing an active role in running a program.
"The businesses' direct participation assures that their investment is spent as they wish it, and allows the business to become involved in worthwhile community efforts."
Information may be obtained from the Virginia Department of Social Services, Neighborhood Assistance Program, 730 East Broad St. - Ninth Floor, Richmond 23219. The phone is (804) 692-1895.
A business also may contact a qualified agency about forming a partnership.
by CNB