It’s no secret that we like to invest in education. Well Said is full of posts about our participation in the Educational Improvement Tax Credit (EITC) Program – but how exactly does does the EITC Program work?
For starters, the EITC program is administered by the Department of Community and Economic Development (DCED). Established in 2001, the EITC program allows businesses and individuals to earn tax credits by donating to program-approved organizations.
Approved organizations fall into one of the following categories: Scholarship Organizations (SO), Educational Improvement Organizations (EIO), or Pre-Kindergarten Scholarship Organizations. EIOs include organizations like community centers or nonprofit museums which provide programs to public schools.
To be eligible for the tax credit, businesses must contribute to an approved organization and be responsible for paying one or more of the tax types outlined on the DCED website. This website also outlines the process on how to apply for the EITC credits.
For SO and EIO Contributions
- Receive a tax credit equal to 75% of your contribution up to $750,000
- Option to increase to 90% when committing the same contribution amount for two consecutive years
For Pre-K SO Contributions
- Receive a 100% tax credit from the first $10,000 contribution
- Up to 90% of the remaining amount up to $200,000
Cabot has been utilizing this program since 2012 and we’ve found it to be a wonderful opportunity to assist numerous school districts and individual students every year. In 2019, we contributed more than $1,000,000 towards educational programs and equipment through the EITC program. Those dollars also resulted in 273 scholarships throughout various private and CTC schools across Pennsylvania.
As a contributing company, there are two options for managing EITC funds: create a dedicated internal team or partner with a third-party organization. At Cabot, we chose to partner with Commonwealth Charitable Management (CCM). They work with businesses and individuals across the state to administer their contributions. Each year we create the list of organizations we want to support and CCM ensures the dollars get there.
They’re also able to help us pivot and reallocate funds if we see a greater need arise. In a recent webinar, Cristine Clayton from CCM discussed how they’re responding to the COVID-19 crisis and are able to shift funds to where they’re needed now, “In particular, because we work statewide, our rural districts were looking at a need for technology. They don’t have access to the internet. They don’t have enough Chromebooks to go around.” We worked with CCM and were able to reallocate over $75,000 from our EITC program to schools across northeastern Pennsylvania.
We hope you see the value in this program and consider this as an opportunity for your business to participate!