Nonprofits seek tax credit guarantee for donors

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COLUMBIA — Leaders of nonprofits whose purpose is handing out scholarships to special-needs students said Friday that they are holding off until the S.C. Department of Revenue can guarantee their donors will get the tax credit they expect.

Legislation giving the agency authority to create a credit-securing process for donors is heading to the Senate Finance Committee.

Lawmakers last year approved the state’s first private-school-choice program, which took effect Jan. 1. The limited program allows a dollar-for-dollar tax credit for donations toward scholarships for special-needs students. But the credits max out at $8 million, on a first-come, first-served basis.

The nonprofits organized to accept donations and provide scholarships want a process that reserves credits, so donors aren’t surprised after filing their tax returns.

As of Friday, $7.4 million remained available for 2014 tax returns, according to the Department of Revenue.

Without a directed process, “it could put the department in limbo in how they treat this, and the individuals claiming these credits could have to file amended returns, or make a contribution and not get a credit,” said Sen. Joel Lourie, D-Columbia, a member of the special subcommittee considering whether to extend the program past June 30.

The panel voted Thursday to advance the bill intended to fix the immediate problem.

Sen. Wes Hayes, the panel’s chairman, said the program will likely be extended as part of the 2014-15 budget.

Of the four scholarship-funding organizations approved by the Education Oversight Committee last month, one already has distributed 56 scholarships worth $415,000 for students attending 10 schools. Jeff Davis, the founder of Mount Pleasant-based Palmetto Kids First, said donations have ranged from $1,000 to $60,000.

But, with few exceptions, the other three are waiting to cash donors’ checks, said Neil Mellen of Access Opportunity South Carolina, which is coordinating with the nonprofits and families.

“We’ve collected enough money to give many scholarships. It’s not just civically correct, but morally, we feel it’s not right to cash that yet,” said Michael Acquilano with the Roman Catholic Diocese of Charleston..

It means scholarships likely won’t be awarded in time to practically help families until next school year.

While it’s frustrating in the short term, the groups prefer that the process is thoroughly vetted and effective to ensure the program’s long-term success, said Mellen, who’s been part of the decade-long advocacy for a tax-credits-for-private-tuition program.

Since 2004, opponents have repeatedly defeated bills viewed as subsidizing private schools that don’t have to meet state and federal accountability laws. The limited program approved as part of the current fiscal year’s budget represented advocates’ first win.

“We all have a long-term view of this,” he said. “We can do a whole lot of good for a reasonably small number of kids who meet the criteria, so it if takes awhile to get up and running and get streamlined and perfected, that’s OK.”

The program allows for scholarships of up to $10,000 each – or the total cost of tuition, whichever is less – for special-needs children attending approved schools. About 60 private schools have so far been approved to receive the scholarships. Donors can claim tax credits for up to 60 percent of their total tax liability.

A student at Camperdown Academy in Greenville, which specifically serves dyslexic students, awarded a scholarship Friday from Palmetto Kids First, said Head of School Dan Blanch. He is the 10th student from Camperdown to receive a scholarship from Palmetto Kids. Tuition to the school is $19,750 a year.

“It makes me look like the good guy: ‘Look! You just won the lottery. You just had half of your son’s tuition paid for!” Blanch said, adding that all 95 of the school’s students applied for a scholarship.

One of the children who has received a scholarship is the daughter of a sheriff’s deputy and stay-at-home mom, he said.

“They’ve been begging and borrowing any way they could to find tuition money, trying to scrounge money together, so when I was able to walk out there and say, ‘Here’s a huge chunk,’ they broke out in tears,” he said.

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