An endowment is a fund held by a tax-exempt organization where the principal of the fund is not wholly expendable. Only the interest and appreciation earned in an endowment fund can be used for current operations. Endowments are established to help Montanans meet long-term needs in our communities for education, social services, health care, economic development, the arts, and more.

Individuals who make a planned gift to a qualified Montana endowment fund will receive a Montana tax credit of 40% of their gift, with a maximum credit of $15,000 ($30,000 for joint filers).

Businesses and corporations that make a direct gift to a qualified Montana endowment fund will receive a tax credit of 20% of their gift, with a maximum credit of $15,000. [Applies to corporations, small business corporations, partnership or limited liability company taxpayers.]

You contact Bridget Wilkinson, One Valley Community Foundation's President & CEO, and tell her how much you would like to donate – for this example, we will use $20,000. She will show you the list of qualified Montana nonprofit endowment funds and ask you to choose which funds you would like to benefit from your gift. You may select either one or several funds or, you may set-up your own named permanent endowment fund. Bridget will collect the information from you that she needs to draw up your paperwork and set up a deferred gift annuity, an easy planned gift that will allow you to take advantage of the tax credit.

With a gift of $20,000, you would receive both a federal charitable tax deduction and a Montana State tax credit. For example, assuming a federal charitable tax deduction of $18,057, you would also receive a Montana State tax credit of 40% of the calculated federal charitable tax deduction, totaling approximately $7,222. This amount would be a direct credit to the taxes you owe to the State of Montana. (These amounts are hypothetical and will vary depending on life expectancy, age at the time of the gift, and your income tax level.)

One Valley Community Foundation will hold this gift in an annuity fund where it is invested and grows with earnings. Once you release the contract on the deferred gift annuity, it will roll into the qualified endowment fund(s) you have designated, along with interest, and be put to work benefiting our community. The gift must be held in a separate annuity fund for a minimum of five years before it can be reassigned to your selected charity or named fund.

This is just one example of how you can take advantage of the Montana Tax Credit. There are many ways to set up a planned gift that can help you with your end-of-year tax planning.

Definition of a Planned Gift 15-30-2327(1) MCA

Definition of a Qualified Endowment 15-30-2327(1) MCA

Defining the Tax Credit for Planned Gifts 15-30-2328 MCA

Defining the Tax Credit for Outright Gifts by Business Entities 15-31-162 and 15-31-162 MCA

Charitable Gift Annuity Exemption Act 33-20-701 thru 705 MCA

Uniform Prudent Management of Institutional Funds Act 72-30-101 thru 103 and 72-30-107 thru 213 MCA