The Virginia Education Improvement Scholarships Tax Credits Program

1. McMahon Parater Foundation for Education & Saint Bridget School The Virginia Education Improvement Scholarships Tax Credits Program

2. Program Overview

3. Overview • According to Virginia’s new Education Improvement Scholarships Tax Credits program, donations to approved foundations will provide scholarships for low-income new students at Virginia non-public schools. • Individual or Business Donors then receive Virginia TAX CREDITS equal to 65% of the donation. • Virginia has allocated $25 million in tax credits for each program year (fiscal year). • The Virginia Education Improvement Scholarships Tax Credits program will continue until January 1, 2028.

4. Benefits for Donors • Individuals can use the Tax Credits against their Virginia personal income tax liability. • Businesses can claim the Education Improvement Scholarships Tax Credits against: • Virginia Corporate Income Taxes • Virginia Bank Franchise Tax • Virginia Insurance Premiums License Tax • Virginia Public Service Corporations Tax • Personal Income Taxes via pass-through entities such as S-Corporations, LLCs and Partnerships • IMPORTANT: Donors should consult their tax advisors to determine their specific tax savings.

5. Additional Tax Savings • In addition to a 65% Tax Credit for the year following the year of the gift, individuals and businesses may also receive federal and state deductions for a charitable contribution, and therefore achieve tax savings in two ways: • For the year the gift is made, donors may be able to take a deduction of the full amount of the contribution against taxable income as a charitable donation on both federal and state income taxes. • The tax reduction equals the contribution amount times the tax rate of the applicable tax (federal or state). • Subject to rules governing deductibility of charitable contributions • IMPORTANT: Donors should consult their tax advisors to determine their specific tax savings.

6. Tax Benefit to Individuals: Example #1 Individual taxpayer who IS subject to Federal Alternative Minimum Tax Individual circumstances may vary. Please consult your tax advisor to discuss your specific tax savings. * Pease Limitation, reinstated Jan. 1, 2013, may impact actual federal tax savings. ** Tax credit taken in Year Two.

7. Tax Benefit to Individuals: Example #2 Individual taxpayer NOT subject to Federal Alternative Minimum Tax Individual circumstances may vary. Please consult your tax advisor to discuss your specific tax savings. * Pease Limitation, reinstated Jan. 1, 2013, may impact actual federal tax savings. ** Tax credit taken in Year Two.

8. Tax Benefit to Businesses: Example Business taxpayer at 34% Federal and 6% Virginia rates Individual circumstances may vary. Please consult your tax advisor to discuss your specific tax savings. * Pease Limitation, reinstated Jan. 1, 2013, may impact actual federal tax savings. ** Tax credit taken in Year Two.

9. Using Appreciated Stock for the Donation * Long Term Capital Gains Tax of 20% plus Affordable Care Act Surcharge of 3.8%. ** Pease Limitation, reinstated Jan 1, 2013, may impact actual federal tax savings.

10. Eligible Donations • The minimum donation to receive Tax Credits through this program is $500. • The maximum donation limit for individuals is $125,000. • There is no maximum amount for any business entity, including sole proprietorships. • Donations may be monetary or marketable securities. • The amount of the Tax Credits may not exceed the Virginia tax liability for the year in which the credits are claimed, however… • Tax Credits may be carried over for the next five succeeding years.

11. Administrative Costs • By statute, at least 90% of the donation must be used to provide scholarships. • MPFE may use up to 10% of the donation to cover the costs of administering the scholarship program. • Every effort will be made to minimize the administrative costs, in order to provide the maximum in scholarship support.

12. Student Eligibility

13. Student Eligibility - Financial • Children receiving these scholarships must come from families whose annual household income is less than 300 percent of the current poverty guidelines.

14. Student Eligibility - Financial • For children with disabilities, the family’s household income must be no more than 400 percent of the poverty guideline.

15. Student Eligibility – New to the School • In addition, the children receiving the scholarships must be residents of Virginia, and fit one of these criteria: • are eligible to enter kindergarten or first grade, OR • attended a Virginia public school for at least half of the current or prior school year, OR • were not Virginia residents during the preceding school year, OR • were prior recipients of a scholarship under this program.

16. Scholarship Allocation • Scholarships are allocated by MPFE to students from qualifying families in the spring and summer prior to the upcoming school year. • Families seeking financial aid complete a FACTS application, including supporting documents, by March 1 for existing families or June 1 for new families and families with business income. • As the statute requires, distribution of the donated scholarship funds must be completed no later than June 30 of the fiscal year following the fiscal year in which the donation was made.

17. Scholarship Allocation • The Commonwealth of Virginia has established maximum scholarship amounts per student, determined by the student’s city or county of residence.

18. Scholarships for Saint Bridget

19. Saint Bridget School Scholarships • The McMahon Parater Foundation for Education (MPFE) is one of 12 foundations approved by the Virginia Department of Education to receive donations under this program. • MPFE provides scholarships to students from low-income families attending Saint Bridget School and the other 28 Catholic schools in the Diocese of Richmond.

20. Donating Scholarships • Contributions to MPFE under this program are used to provide scholarships to Catholic schools in the Diocese of Richmond. • Donors may request that their contributions support scholarships at Saint Bridget School. • Donors may not direct their funds to support a specific student. • Direct contributions to Saint Bridget for other purposes or other scholarships do not qualify for Tax Credits under this program. Only gifts given to MPFE that have been pre-approved specifically for this program are eligible for these Tax Credits.

21. Process for Obtaining Tax Credits • Before making the donation, obtain a blank Letter of Intent and Preauthorization Form from Saint Bridget School or MPFE. • Return the Letter and Form to MPFE, which will submit the Preauthorization Form by secure electronic dropbox to the VA Department of Education (DOE) for approval. • The DOE will respond to the donor directly with a Preauthorization Notice once the Tax Credits have been approved. • The donor has 180 days after receiving the Notice from the DOE to send the donation to MPFE, with the Notice of approval. • After 180 days, the Tax Credits become void if the gift payment has not been made.

22. After the Donation has been made… • Within 20 days of receiving the gift, MPFE will: • Send the donor an acknowledgement of receipt of the gift, • Send the DOE a notice that the gift payment has been received, and • Notify Saint Bridget School that the gift has been received. • Within 30 days of receiving notice of payment, the DOE will issue the Tax Credit Certificate to the donor. • The Tax Credit Certificate must be attached to the tax return in which the Credits are being claimed.

23. McMahon Parater Foundation for Education & Saint Bridget School For more information, please contact • Pamela Wray • Development Director • St. Bridget School • (804) 288-1994 • pwray@saintbridget.org www.richmonddiocese.org/mpfe