Businesses and individuals in Pennsylvania earn tax credits by giving to financial aid via special programs.
Penn Charter’s history of access has been bolstered in the last two decades by state tax-credit programs offered to businesses, and, more recently, to certain individuals who give through something called “Special Purpose Entities” or SPEs. These programs allow businesses and those individuals to receive income tax credits for gifts of financial aid to qualified Penn Charter students.
“Penn Charter’s commitment to the community goes back to its founding,” said Director of Middle and Upper School Admissions Karen Hallowell. “The 1701 charter of the school laid out a plan for William Penn’s friends to pay the tuition of students who otherwise could not afford to attend. The Commonwealth of Pennsylvania reinvesting in this mission keeps Penn’s vision alive today.”
The Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC) programs offered by the Commonwealth of Pennsylvania enable businesses and individuals to give to the school in support of financial aid, and, in doing so, receive a credit for their tax liability. Under EITC, individuals and companies who pay certain taxes in Pennsylvania (see page 23) can donate up to $750,000 to eligible schools and scholarship programs for Pennsylvania children. OSTC supports scholarships at private and parochial schools for students in low-income households coming from low-achieving public schools. Penn Charter is eligible to receive both EITC and OSTC donations.
In 2014, Pennsylvania expanded the tax credit program to include opportunities for donations by individuals to translate into credits for personal tax liability. Penn Charter has worked with larger SPEs, like BLOCS and Central Pennsylvania Scholarship Fund (CPSF), to facilitate gifts from individuals, who, as part of the program, then receive an income tax credit on their state income tax return.
Recently, Penn Charter established two SPEs for the purpose of expanding opportunities for individuals who want to support financial aid at Penn Charter and receive income tax credits for those gifts. Having our own SPE is beneficial because we are able to direct the full impact of the gifts to Penn Charter, which was not necessarily the case when we worked with other SPEs that charged a fee.
In 2018-19, $2,210,170 for financial aid was given to Penn Charter via the Pennsylvania tax-credit programs— EITC and OSTC from businesses and individuals both—an increase of 87 percent since 2013-14.
“One thing that is unique about Penn Charter is its location in Philadelphia,” said Karen Wolfe, the attorney who supported PC to establish its new SPEs. Directing tax liability, she said, “has an immediate impact on the community” surrounding the school and “is a winwin for those who want to contribute to education and for the educational institutions,” Wolfe continued.
“Penn Charter is thriving today because of its commitment to providing access to students who could not otherwise dream of an educational experience like that which Penn Charter provides,” said Hallowell.
Drew and Susanna Brown P ’29, ’33 support the Penn Charter Annual Fund each year and have made a gift to the How Far? Campaign. The Browns also recognize that socioeconomic diversity benefits all students in the community, not only those with demonstrated financial need. The Browns direct donations to Penn Charter and other institutions meaningful to their family via CPSF, supporting those institutions while at the same time reducing their income tax liability.
“We like the ability to use tax money we are already spending to give to the schools we care about,” said Drew Brown. The couple chooses to direct their gift through CPSF because it does not charge a fee. Like PC’s own SPEs, “100 percent of the money I give through CPSF goes to the schools I support,” he said. “I found CPSF to be a great way to give, and they have plenty of room for more donors who are looking to do more.”