Tax Benefits

Federal and State Tax Benefits

Donations to the FM Area Foundation generally qualify for a deduction on both your federal and state income tax return. 

ND Charitable Income Tax Credit

If you are a North Dakota taxpayer, you may be able to claim a credit of 40% on a minimum donation of $5,000 to a qualified endowment through the North Dakota Charitable Income Tax Credit. This is on top of the savings you receive on your federal tax return by itemizing your qualifying charitable donations. 

By taking advantage of both the state tax credit and federal tax deduction, you can significantly lower the net cost of your contribution and triple its impact. 

40% tax credit for individuals

Gifts made by an individual to a qualified endowment fund are eligible for the 40% tax credit if the aggregate of that year's gifts are equal to $5,000 or more. 

The maximum credit amount that may be claimed is $10,000 for an individual or $20,000 for married individuals filing jointly. 

Example: Mrs. Smith, a North Dakota resident, donates $20,000 in cash to an endowment fund. She receives an $8,000 tax credit (40%) on her North Dakota return. If she is in the 28% Federal tax bracket, her Federal tax savings are $3,360 (28% of $12,000). The "cost" of her $20,000 gift is offset by $11,360 in tax savings.

40% tax credit for businesses

Gifts made by a business entity to a qualified endowment fund are also eligible for a 40% tax credit. They, too, have an annual limitation of $10,000. 

In some cases the entity will "pass through" some or all of the credit to the business owners or to the beneficiaries of the trust or estate.

Example: Partnership XYZ has three equal partners. They would each receive a $3,000 tax credit available for use on their North Dakota individual income tax returns if the partnership qualifies for a $9,000 credit. 

This information is provided for educational purposes only. Please consult your own attorney, accountant or financial advisor for advice on your situation.

Funds that qualify 

Donors wanting to take advantage of the tax credit can either:

  1. Create their own qualifying fund or
  2. Give to an existing fund

We have a number of endowed, agency funds that qualify for the North Dakota Charitable Income Tax Credit. Agency funds are created to permanently support the operations of a particular nonprofit organization. 

When you give to one of these funds, you will not only be able to claim the tax credit, you will be making a sustainable, forever gift. Donors who decide to create or add to an endowment do so because they understand the importance of supporting the organization not only during their lifetime, but for generations to come. 

To find out which funds qualify, contact Greg Diehl at greg@areafoundation.org or call us at 701.234.0756.