Businesses urged to help communities Firms can trade goods and services to get tax credits

$1 million program

Neighborhoods would benefit in nonprofit, business partnership

August 18, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

In a move to revitalize older neighborhoods, the state will offer businesses $1 million in tax breaks next year in exchange for helping nonprofit groups funnel services, jobs, training and redevelopment into targeted communities.

Under a new state housing program, nonprofit groups sponsoring community projects can apply for tax credits, then trade them to businesses in exchange for cash or goods.

"The purpose of the program is to improve the well-being and the health of the community," said Nora Lynn, coordinator of the Neighborhood Partnership Program in the state's Department of Housing and Community Development.

"We do that by strengthening the ability of nonprofits serving areas to build partnerships with private businesses."

The state expects $1 million in tax credits to generate $2 million in private contributions from small businesses and major corporations alike.

Projects can fall under several broad categories:

Community services: Programs could offer child care, after-school activities, adult day care, health care, substance abuse treatment, emergency shelter or assistance in packaging loans or writing business plans.

Redevelopment assistance: Projects could include building improvements such as rehabilitation of vacant properties for community programs.

Employment: Programs could offer either job training or job placement for low-income people.

Education: Groups could offer tutoring or adult literacy programs or teach parent skills, English as a second language or General Equivalency Diploma classes.

Crime prevention: Projects could include neighborhood watch programs, lighting improvements or midnight basketball programs.

Nonprofit groups can apply beginning in September. The state will review the projects and award tax credits. The nonprofit organizations will be able to trade in those credits for goods or cash starting Jan. 1.

Eligible neighborhoods -- including most in Baltimore -- are those designated as revitalization areas by local governments.

Organizations must market their own tax credits. They may appeal to any business operating in Maryland that pays taxes levied on corporations, public service companies or financial institution franchises or pays an insurance premiums tax. Individuals are not eligible for credits.

For businesses, "It gives them a great deal on their taxes," Lynn said.

"It reduces the amount of taxes they're actually paying, and it gives them the opportunity to direct their tax dollar to organizations and causes in the community that are important to them."

Businesses can claim a state tax credit equal to half their contributions, which must be in the form of cash or goods -- not services.

For instance, a business could donate photocopiers, food or a van.

Contributions must be worth at least $500. The department will award credits on a maximum $250,000 per project.

Maryland is one of 13 states taking such an approach to encourage investment in predominantly low-income neighborhoods, said Carol Wayman, associate director of programs for the National Congress for Community Economic Development, a trade association for community development corporations.

Maryland started its program as one of several recent initiatives to strengthen older communities.

Twelve other states have passed legislation to allow for tax credit programs, and nine other states run programs.

"Overwhelmingly, they've been very successful in providing much-needed funds and goods and services in low-income communities," Wayman said.

For nonprofits used to relying on grants, she said, "It's a different way of meeting the operating budget and tying into a sector they might not have as much contact with.

"Rather than requesting a donation, they're going out with something to offer. You get your credit, and it gives you a license to hunt."

For more information, nonprofit groups can contact the state at (410) 514-7267.

Pub Date: 8/18/96

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