Creighton University

Legislation Offers Increased Tax Incentive for Charitable Giving

Nebraskans now have an added incentive for charitable giving! Through December 31, 2009, Nebraska taxpayers are eligible for an annual tax credit of up to $5,000 for planned gifts and outright gifts earmarked for the endowments of charities based in Nebraska.

"Creighton University is proud to have been one of the sponsors of this legislation," said Creighton President the Rev. John P. Schlegel, S.J. "It was a strong endowment that allowed Creighton to be a tuition-free institution for its first 46 years, and our growing endowment has been instrumental in the University achieving recognition as one of the top faith-based institutions in America."

What is an endowment?
The law benefits donors who make certain types of gifts to a permanent endowment (i.e., a permanent irrevocable fund that is used for Nebraska charitable purposes and held by a Nebraska charitable organization). Endowment funds function as a charity's "nest egg," providing a permanent, stable source of operating income by paying a stated percentage each year to the charitable recipient. Though they grow through careful investing and planning strategies, significant endowment growth typically derives from charitable donations. A strong endowment helps Creighton meet the demands of general operating expenses, decreasing the University's dependence upon tuition and clinical revenue.

What types of gifts to Creighton's endowment are eligible for tax credits?
By limiting the availability of the tax credits for individual donors to irrevocable life-income gifts, the Nebraska Unicameral has increased the immediate income and tax benefits already present from these gifts. The gifts eligible for tax credit are: a charitable remainder trust, a charitable gift annuity, a charitable life estate agreement, a gift of paid-up life insurance, a charitable lead trust.

Who is eligible to receive the new tax credits?
Residents of Nebraska can receive a state income tax credit for the above-mentioned gifts. The credit is equal to a maximum of 15 percent of the federal income tax contribution deduction of a gift made during tax years 2006 through 2009 up to an annual maximum of $5,000 per individual. For example, if a 75-year-old donor gives $10,000 to fund a charitable gift annuity, the donor's federal income tax contribution deduction is approximately $4,226* and the Nebraska state income tax credit is 15 percent of $4,226 (almost $634).

Am I still eligible for the federal and state income tax deduction if I use this credit?
The federal income tax deduction is still allowed. However, the state income tax deduction cannot be used in addition to the credit. You can choose which to use—either the state deduction or the state credit. However, in most cases, a taxpayer will benefit more by taking the 15 percent tax credit instead of the state tax deduction, because credits reduce your income tax liability on a dollar-for-dollar basis. Moreover, tax credits are available to all taxpayers regardless of whether they itemize their income tax deductions.

Can the credit be carried forward or backward to different tax years if I cannot use the entire 15 percent credit this year?
A donor may use the credit only in the year the gift is made.

How can I take advantage of this new tax credit program?
Contact Creighton's Office of Estate and Trust Services at (800) 334-8794 or (402) 280-1143 for more information, or by e-mail at giftplanning@creighton.edu.

Creighton University
Office of Estate and Trust Services
2500 California Plaza
Omaha, NE 68178
(402) 280-1143
(800) 334-8794
giftplanning@creighton.edu