Administered by the Indiana Housing & Community Development Authority, “NAP credits” offer an attractive state tax benefit to generous Hoosiers. The mission of the IHCDA is “to provide housing opportunities, promote self-sufficiency, and strengthen communities.” In pursuit of this mission, the IHCDA, in conjunction with the Indiana Department of Revenue, awards up to $2.5 million of 50% state tax credits annually to certain 501(c)3 organizations. Nonprofits which receive NAP credits are then able to pass those credits to their financial supporters.

How it Works

Indiana nonprofit organizations apply annually for NAP credits. In order to be “NAP-eligible” organizations must fulfill certain requirements, including funding “projects that improve distressed neighborhoods and the lives of families that live there.” The maximum amount of NAP credits each organization may receive is $40,000. Nonprofits can then distribute those credits to their donors.

Benefits

Organizations which provide NAP-eligible services can use the credits to incentivize donors to double their gifts, thereby providing additional funding for essential programs. Donors enjoy an opportunity to leverage their gifts, thereby making an even greater impact in the lives of their neighbors.

For example, suppose a donor to Dayspring Center is contemplating a $1,000 gift. Dayspring might counter-offer the donor with a $2,000 NAP credit, pointing out that if the donor instead gives $2,000, the 50% Indiana state tax credit would still only cost the donor $1,000 net ($2,000 gift – $1,000 NAP credit on their Indiana state tax return = $1,000 out of pocket).

Summary

Tax deductions for charitable gifts are wonderful, but credits are even better; we encourage you to discuss the benefit of NAP credits with your tax advisor. Generous Hoosiers have certain opportunities to leverage their gifts to organizations which are demonstrably working to improve the lives of fellow citizens. If you have a desire to support one or more of these organizations, we encourage you to contact them directly to inquire whether they still have NAP credits available.

 

Disclosures

Past performance is no guarantee of future results.  Investing involves risk, including possible loss of principal.  Diversification may not protect against market risk or loss of principal.  The opinions expressed above should be construed as neither investment advice nor a solicitation to buy or sell securities.  Actual investor results may vary.

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