What if your charitable donations could provide for the needs of Anne Arundel County nonprofits forever? Donating to a local endowed fund is one way to assure that can happen. Endowments create a permanent source of capital to ensure financial support for charitable causes in perpetuity. In addition, endowments are invaluable in times of economic uncertainty, especially when other funding is no longer available.

By definition, endowments are a pool of assets invested in equities, bonds or other investment vehicles of which a percentage is withdrawn annually to assist charitable causes. Nonprofits use the annual investment income for programs, operations or other specified purposes. The principal (remaining assets and investment returns) is reserved in the endowment to provide for growth over time. Simply put, endowments are permanently restricted funds that allow charitable organizations such as the Community Foundation of Anne Arundel County and other nonprofits to continue to fulfill their missions in perpetuity.

Endowments have many benefits for both donors and charitable organizations. They can help create a lasting legacy while supporting charitable causes or community needs. They can provide an assurance that the programs or causes donors care about will survive. In addition, donating to an endowed fund can provide tax benefits for donors through Endow Maryland.

What is Endow Maryland?

Endow Maryland is a Maryland state tax credit that rewards donors who help build permanent charitable funds for local communities across Anne Arundel County and the state. Endow Maryland offers a tax credit for gifts from $500 to $50,000 to permanent, endowed funds at qualified Maryland community foundations such as the Community Foundation of Anne Arundel County. These gifts can be made to an existing endowment fund or donors can create new funds that benefit Maryland organizations.

Endow Maryland provides an incentive for Marylanders to give back to their local communities in a meaningful and lasting way. It promotes philanthropic giving in Maryland, for Maryland.

Endow Maryland tax credits can be used to support permanent charitable funds at CFAAC that allow us to address Anne Arundel County’s greatest needs today and for generations to come. Gifts made to establish or add to an existing endowed fund at CFAAC may qualify for a 25% tax credit on the donor’s 2022 state tax return. Maryland community foundations are sharing $250,000 in tax credits for 2022 and these credits are available on a first-come, first-served basis.

Here’s an example of how it can work: Perhaps you donate $1,000 to a CFAAC-endowed fund; your state taxes will be reduced by a $250 tax credit and the net cost to you would be $750. If you itemize deductions on your federal tax return, your gift may also be eligible for the federal charitable tax deduction, reducing the cost to you even more. Check with your financial advisor about your specific situation.

CFAAC has many qualified permanent funds that can benefit Anne Arundel County forever including the Fund for Anne Arundel, which supports grant-making to address the most critical needs of Anne Arundel County. The current focus area of the Fund for Anne Arundel is nonprofit organizations offering physical, mental and behavioral health programs for children in Anne Arundel County. This is one example of the many qualified permanent funds at CFAAC.

With limited tax credits available in 2022, we encourage current CFAAC endowment fund holders to add to their fund and invite others to establish an endowment fund or donate to an existing endowment fund to support the causes they care about early in the year to take advantage of this opportunity. To find out what qualified permanent funds are available at CFAAC, visit cfaac.org/EndowMaryland

CFAAC is a tax-exempt, 501(c)(3), publicly supported philanthropic organization with the long-term goal of building permanent funds that provide support to local nonprofit organizations through grants and special projects.

Mary Spencer is the President and CEO at the Community Foundations of Anne Arundel County.

This story was originally printed in the January 16, 2022 edition of the CAPITAL GAZETTE.