Facebook LinkedIn Twitter RSS

Bank donations to schools create good will, tax benefits

By ,
Peoples Security Bank presents the State Theatre Center for the Arts in Easton with a donation through the Educational Improvement Tax Credit program.
Peoples Security Bank presents the State Theatre Center for the Arts in Easton with a donation through the Educational Improvement Tax Credit program.

The Neffs National Bank in Neffs donated $100,000 this year to four scholarship and educational improvement organizations via the state's Educational Improvement Tax Credit program. The bank has donated to the same cause for several years now and intends to donate next year, as well.

“We do it because there is a two-fold benefit. We get a net $90,000 reduction on our state taxes, and it’s good for the bank,” said Kevin Schmidt, president and CEO of the bank. “We are helping out neighboring organizations. I strongly recommend that businesses look into doing it. It is a great thing.”

There are many banks in the Greater Lehigh Valley that – such as Neffs National – donate money annually through the EITC, a program run by the Pennsylvania Department of Community & Economic Development.

The program provides tax credits to banks and other eligible companies that donate to pre-kindergarten to 12th grade scholarship programs and educational improvement organizations. The program basically provides a way for tax-paying businesses to redirect Pennsylvania tax dollars to support education in their communities.

Officials at several area banks say they receive tax credits from the EITC program that are 75 percent to 90 percent of their donation, up to a maximum of $750,000 per year.

They file an application with the state annually to participate in the program, which not only offers a generous financial incentive but also a means to support community organizations and foster education for future generations.

MAKING AN IMPACT

David Hunsicker, president and CEO of New Tripoli Bank in New Tripoli, said the community bank donated $100,000 last year to educational improvement and scholarship organizations in its service area via the EITC.

“It is good for a business to do. It goes toward education, and anytime we can help students in our community, it makes an impact,” Hunsicker said. “… It allows them to get things that they otherwise would not be able to pay for.”

He said the bank’s contribution shaves $90,000 from its state tax obligation this year. (The bank has shareholders and gets taxed on its capital stock.)

WIN-WIN

Large banks such as BB&T, ESSA, Santander and M&T also give to educational causes.

Last year, M&T Bank Corp., headquartered in Buffalo, N.Y., with locations in the Greater Lehigh Valley, gave more than $2 million to schools and education programs throughout Pennsylvania by way of the EITC. In turn, it received the maximum tax credit it can get for the donation.

“The bank contributes to the EITC program because it offers an opportunity for us to provide funding to eligible organizations to help drive educational improvements and scholarships,” said Tom Koppmann, president of M&T Bank’s Southeast Pennsylvania Region. “The tax credits we derive are an important benefit that allows us to increase the number of worthy organizations we support. All the way around, the program is a win-win.”

‘REAL IMPACT’

Koppmann said M&T has contributed at the maximum level for about 10 years.

“Each of our community bank regions’ charitable committees review the list of eligible schools and agencies and makes decisions to allocate funds across the state,” Koppmann said.

“More than 50 percent of M&T’s support flows to organizations in low-to-moderate income areas, and the bank is able to make a real impact in strengthening the communities we serve.”

Last December, North Carolina-based BB&T Corp., which has branch locations throughout the region, spread holiday joy by announcing it donated more than $600,000 to 82 scholarship and pre-kindergarten scholarship programs throughout Pennsylvania.

BENEVOLENCE, FINANCIAL BENEFIT

Cristine Clayton, executive director at Commonwealth Charitable Management, said the organization assists financial institutions with the EITC process.

Clayton said banks can select from the list of qualified educational and scholarship organizations on the DCED website.

“The financial gain to these banks is significant when you think about how the cost can be six to seven cents on the dollar,” a reference to a bank’s tax liability, she said.

“But it really is the good will aspect that is far more valuable,” Clayton said. “Some of the students would not be able to return to school if not for this program.”

NOT AVAILABLE TO CREDIT UNIONS

Unlike banks, credit unions cannot receive the tax credit through the EITC program.

According to Michael Wishnow, senior vice president of marketing and communications for the Pennsylvania Credit Union Association, credit unions are exempt from the state-run venture because they do not pay corporate net income tax and are member-owned financial institutions.

“It is, however, an added incentive for businesses that pay taxes,” Wishnow said.

DICTATED BY BUDGET

Bank officials say not all banks can donate and not all banks that apply for the tax credit will be approved. Some financial institutions cannot donate because of budgetary constraints.

Other banks say they make donations based on what their budgets will allow for the year and find the EITC program to be a catalyst for making educational improvements in their communities.

In their estimation, every little bit counts.

‘COMPELLED TO SUPPORT’

One bank that gives what it can is Merchants Bank of Bangor. The community bank, which has nine locations in Northampton County, donated $11,000 to the Children's Home of Easton – among other donations.

“We have limited discretionary funds, yet we are compelled to support local organizations. This tax credit incentive allows us to do that,” said Susan Kovacs, vice president/marketing and community relations director with Merchants Bank. “One of our missions is to maintain the well-being of our communities.

“Investments in our children through scholarship and/or educational improvement programs is just one of the ways we can ensure our communities’ well-being for the long term.”

Also Popular on LVB

Write to the Editorial Department at editorial@lvb.com

Leave a Comment

test

Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
View Comment Policy

Comments

close