You Can Make a Difference by
Giving through Pennsylvania Tax Credits
Supporting Children’s Scholarships for Quaker Education
It only costs a dime to give a dollar to fund a scholarship for our students
Make a gift of financial assistance for qualified students to attend our school and earn tax credits on your Pennsylvania state tax liability. The Education Improvement Tax Credit (EITC) program supports many of our students each year. Every dollar raised through EITC goes directly to scholarships, helping students at our school experience a quality education.
Here is how it works:
West Chester Friends School (WCFS) is a founding member of The Friends Collaborative (TFC) which provides a streamlined process for individuals and
businesses to participate in EITC. TFC receives EITC credits from the state of Pennsylvania and disperses them to businesses and individuals.
To participate, you agree to make a contribution to TFC roughly equal to your anticipated Pennsylvania state annual income taxes. We recommend that you speak with your accountant to help determine what you owe. You also agree to participate for two consecutive years. In return, you receive a tax credit each year for 90% of the amount of your contribution.
For example, if you have $9,000 in state taxes owed and you make a gift of $10,000 through TFC, you will receive $9,000 (90%) back from Pennsylvania in state tax credits. Your out of pocket gift is $1,000 which you may be able to deduct on your federal taxes.For $1,000 of out of pocket costs, your participation helps provide a scholarship for $10,000.
The tax credit is refunded to you by Pennsylvania. TFC sends you a K1 tax form in mid-March allocating the state income tax credits to you and distributes the funds to WCFS and other member schools.
This brief video helps explain how it works.
To learn more, please contact us:
Kim Walters, Director of Development, at 610-696-2839 or [email protected] or
Lee Ann Sullivan, Development Associate/EITC Specialist, at 610-696-2962, x113 or [email protected]
Frequently Asked Questions
Pennsylvania Educational Improvement Tax Credit (EITC) - What is it?
The Commonwealth of Pennsylvania offers a unique opportunity for businesses in the state to
reduce tax liability by contributing to registered scholarship organizations. Gifts to scholarships
at our school can generate a tax credit of 90% of the contributed amount.
Pennsylvania Opportunity Scholarship Tax Credit Program (OSTC) - What is it?
Like EITC, the OSTC program provides tax credits to eligible businesses contributing to an
Opportunity Scholarship Organization. Business contributions are then used to provide tuition
assistance in the form of scholarships at our school for preschool students.
What is a tax credit?
A tax credit directly reduces the amount of taxes owed and provides a dollar-for-dollar reduction
in tax liability. A tax credit is different from a tax deduction. With a tax deduction, you reduce the
amount of income subject to taxes.
Does this program have anything to do with the Earned Income Tax Credit?
No, the Earned Income Tax Credit is a completely different tax credit that is provided at the
federal level. The Educational Improvement Tax Credit is a Pennsylvania tax credit program.
Although they have the same acronym, the two programs are completely separate and different.
What are some of the basics about how this program works with The Friends Collaborative?
You agree to contribute the same amount for two consecutive years
You receive a tax credit equal to 90% of your contribution
You offset your PA state tax liability
You receive a K-1 form in March of the year following your contribution
How Can Individual PA Taxpayers Participate?
Individuals may join a Special Purpose Entity (SPE) provided through The Friends Collaborative
(TFC). The SPE operates as a pass-through mechanism for their personal tax liability.
As a member of an SPE, individuals may receive a tax credit for 90% of their contribution
amount. It may also be possible to claim a federal charitable deduction on the remaining 10%.
How Can My PA Business Participate?
A straightforward way to participate is by partnering with The Friends Collaborative (TFC), which
was formed in 2016 by a group of individuals who were passionate about increasing access to
Quaker education. WCFS is a member school along with 21 other Quaker schools.
TFC currently holds tax credits that have been allocated by Pennsylvania. It is able to do this by
forming several Special Purpose Entities (SPE) with the goal of raising scholarship dollars
through the PA EITC and OSTC programs. Businesses contributing to one of TFC’s Special
Purpose Entities will receive a tax credit of 90% of the donation.
TFC provides an efficient and streamlined process to participate. They provide a secure
electronic method for you to make a donation and to receive the credit back once you file your
taxes in April.
Businesses may also apply directly to the Pennsylvania Department of Community and
Economic Development. Application information and deadlines can be found here:
https://dced.pa.gov/programs/educational-improvement-tax-credit-program-eitc/
What Pennsylvania taxes are eligible for EITC?
My business operates in PA and pays one or more of the following taxes:
Corporate Net Income Tax
Personal Income Tax
Capital Stock/Foreign Franchise Tax
Bank Shares Tax
Title Insurance & Trust Company Shares Tax
Insurance Premium Tax (excluding unauthorized, domestic/foreign marine)
Mutual Thrift Tax
Malt Beverage Tax
Surplus Lines Tax
Or, I am an individual and have:
A Pennsylvania tax liability and accredited investor status
What is the minimum contribution amount for an individual or a business?
The minimum contribution for individuals and businesses participating through an SPE is
$3,000. There is no maximum limit that can be contributed.
How do I figure out how much tax I owe?
Any individual or business with a PA income tax liability is eligible to participate. The starting
point is to know your annual PA tax liability. We recommend that you check with your accountant
or tax advisor, if you use one, or look up your annual PA tax liability.
Here is a tax liability calculator that can help. This tool provides information only and does not
serve as tax or legal advice. For guidance tailored to your individual tax situation, please consult
with your tax advisor.
What are the deadlines to participate?
When tax credits become available through The Friends Collaborative (TFC), they are issued on
a first-come, first-served basis. In general, there is a round available in early spring and a round
available in early fall. Businesses and individuals wishing to participate through and TFC are
asked to contact Lee Ann Sullivan at [email protected] for more information on tax credit
availability.
I am interested in participating. What should I do now?
1. Speak with Kim Walters ([email protected]) or Lee Ann Sullivan
([email protected]) at West Chester Friends School and make a request to
participate
■ Include the dollar amount of the intended contribution
■ Your name as it appears on your taxes
■ A salutation (if different from your name for taxes)
■ E-mail address for all contact related to your participation
■ Confirm a two year commitment (in some cases, we may be able to offer
a one year participation)
2. You will receive electronic information from The Friends Collaborative. Login to the
secure online portal: fill out the participant questionnaire
3. Sign the digital contract
4. ACH payment is processed
5. In March of the following year, a K-1 will be issued for use when filing your PA tax return
6. In the following year, repeat steps 2-5!
