The Montana Endowment Tax Credit | An Advisor's Perspective
Dave Cole understands charitable planning from both sides of the table: professionally, as someone who helps clients think through major financial decisions, and personally, as a donor. When he and his family began exploring the Montana Endowment Tax Credit, they were not looking for a quick year-end deduction. They wanted a tax-efficient giving strategy that would create lasting support for local organizations.
"We wanted to find a meaningful way to support Montana communities, and creating an endowment through One Valley Community Foundation felt like the right vehicle," Dave said. "The Red Ants Pants Foundation checked an important box for us by supporting women in leadership across our communities and several other initiatives that resonate with our giving ethos. On the impact side, we wanted something lasting. On the tax side, we wanted to make the gift as efficient as possible using the tools Montana makes available."
That combination led Dave to the Montana Endowment Tax Credit, or METC. For eligible donors, the METC may provide a Montana income tax credit equal to 40% of the charitable value of a qualifying planned gift, up to $15,000 per individual or $30,000 for couples filing jointly.
For the Coles, the credit was part of the decision, not the reason for it. They first knew they wanted to make a lasting charitable commitment. The METC gave them a way to pair that commitment with thoughtful tax planning.
“We specifically wanted to use the METC to generate a credit against our Montana state tax liability,” Dave said. “Once we understood how it worked, it was a pretty clear choice.”
Collaborative Planning Before Execution
Once the Coles knew what they wanted their gift to accomplish, the next question was how to structure it. Dave brought One Valley and his CPA into the conversation before anything was completed.
“The One Valley team sat down with us and our CPA to walk through the strategy before we executed anything,” Dave said. “That collaboration gave us confidence that we were structuring it correctly and that it was the right long-term move.”
Through One Valley's structure, the Coles made their initial gift to establish a deferred charitable gift annuity, one of the vehicles that qualify under the credit. The contribution will be held and invested for five years before its full value, including investment growth, is directed to a permanent endowment that will provide long-term support for the Red Ants Pants Foundation.
Identifying Ideal Client Profiles
Dave is clear that the METC is not the right fit for every charitable conversation. The strongest opportunities begin with a client who already cares deeply about a Montana nonprofit or cause and wants to create permanent support for it.
A significant tax year, including one that follows a business or property sale, can make the conversation timely. But the client’s charitable goals, Montana tax situation, and desire to make a long-term commitment still need to align.
“This is a great fit for someone who is genuinely philanthropic and wants to make a lasting impact on a nonprofit’s financial future,” Dave said. “If a client is looking for immediate, on-the-ground impact, this probably is not it. An endowment is a long-term play by design.”
For clients who want to address an urgent need, a direct gift may be the better path. For those who want to create a lasting source of support, the METC can be a valuable tool to explore.
The value of an early conversation
Advisors do not need to become experts in every planned-giving structure before raising the opportunity. Their most valuable role is often recognizing the right client moment, understanding what the client cares about, and bringing the right people into the conversation early.
“My honest advice is to loop in the team at One Valley early to talk through the client’s profile, what they care about, and build the plan from there together,” Dave said. “The credit itself is not the hard part. The education around it is what matters most.”
One Valley can help advisors and their clients explore whether the METC may fit the client’s goals, prepare a personalized illustration, and coordinate with the client’s team of advisors as the plan takes shape.
Start a conversation about the Montana Endowment Tax Credit.
Disclaimer: This article is for educational and informational purposes only and does not constitute tax, legal, or financial advice. Tax implications vary based on individual financial circumstances. Clients must consult their CPA, estate attorney, or financial advisor prior to executing planned gifts.