The Mission-Driven Venture: Business Solutions to the World's Most Vexing Social Problems (Wiley Nonprofit Authority) by Marc J. Lane

Author:Marc J. Lane [Lane, Marc J.]
Language: eng
Format: mobi
ISBN: 9781118416792
Publisher: Wiley
Published: 2014-12-16T14:00:00+00:00

First, the investor must be qualified as a Community Development Entity by the U.S. Treasury's CDFI fund.

The qualifying entity must then submit an application for the tax credit. The process for becoming certified is competitive; the Treasury's reviewers make certain that proposed investments have a profound impact on the communities the tax credit is intended to serve. Demand for the tax credit far exceeds the tax credits allocated, about $3.5 billion in 2013.

Once approved to receive the tax credit, the certified entity is then authorized to raise a certain dollar amount to invest. For entities that qualify, an investment like the one into the Urban Health Plan facility reduces federal taxes by 39 percent of the investment made. If, for example, a $100 investment is made, the entity can write off $39 from its tax bill. For its $15 million investment, the Nonprofit Finance Fund was eligible for a $5.85 million tax write-off, which the Nonprofit Finance Fund would pass on to their investors. That's how powerful the New Markets Tax Credit is.

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