NAP Tax Credit
A $10,000 gift may only cost you $2,650. Because of the Federal Charitable Tax Deduction, the State of Missouri Charitable Tax Deduction and the 50-50 NAP Tax Credit, many donors are learning that their 50-50 credit is actually worth much more to them. We encourage you to read about NAP credits below and visit with your tax consultant about this opportunity. For your convenience, we’ve also made the below information available in PDF format. Simply click the link at the bottom of the page.
About the Neighborhood Assistance Program
& How it can benefit your bottom line
Southeast Missouri Food Bank is a 501(c)(3) not-for-profit corporation. Your donation is tax deductible to the full extent of the law. In addition, the Missouri Neighborhood Assistance Program (NAP) tax credits approved for this project may be applicable to your donation.
About NAP
In 1978, Missouri became the third state in the nation to adopt legislation creating a Neighborhood Assistance Program (NAP). Since that time, more than 1,000 organizations in 200 cities throughout Missouri have benefitted from this program. More than 9,000 businesses have given a total of $145 million toward NAP projects, and in return, the state has approved more than $76 million in tax credits for those donors (50% of donations).
The philosophy behind the program is quite simple—it enables businesses to redirect their tax dollars to help finance local projects. Acting as an incentive for business involvement, the state tax credit not only stretches the amount a business might normally be able to give, but it provides an opportunity for private business, state government and the nonprofit sector to cooperate as partners in addressing community needs.
How it Works
Unlike a direct government grant, this form of state assistance involves no transfer of state dollars. Rather, the project recipient assumes full responsibility for securing the desired financial (or in-kind) support through direct fundraising efforts. The state's role is to approve projects and to offer tax credits to eligible donors who contribute to those projects. Organizations submit project proposals to the Missouri Department of Economic Development (DED), and once a project is approved, the organization is authorized to offer a certain amount of tax credits to eligible contributors.
The tax credit equals up to 50% of the value of the contribution. These tax credits represent “coupons” that donors may then claim or redeem when they file their state tax return.
Who is Qualified for NAP Tax Credits
All companies and certain individuals qualify for the NAP credit, including:
Corporations
Insurance companies
Express companies
Banks and other financial institutions
Partnerships and their individual partners
S‐corporations and individual shareholders
Individuals operating a sole proprietorship
Individuals operating a farm in Missouri
Individuals with rental property in Missouri
Special Features of NAP Credits
May be claimed against a variety of state taxes due and must be claimed in the following order:
Financial Institution Tax
Corporate Franchise Tax
Income Tax (Corporate & Individual)
Five-year carry-forward provision (Donor has six tax periods in which to claim the credit; any balance remaining after the sixth year is forfeited.)
Not refundable or transferable
May be combined with the federal charitable deduction in most cases
Rules for valuing NAP donations are more favorable than IRS rules in some instances
Qualifying Donations
In-kind donations of food to food banks (Only food banks are eligible to assign tax credits for food donations.)
Cash—face value amount of check
Materials, Supplies & Equipment—Valued at the lesser of either the fair market value or donor's cost
Technical Assistance/Professional Services—Valued at the standard billing rate
Labor—Valued at employee's hourly wage plus fringes
Real Estate—Valued at the lesser of two independent appraisals
Stocks & Bonds—Valued at stock market prices (high) on the date of transfer, but must be sold by the nonprofit before credit will be approved for the donor
Sample Missouri NAP Computation
Below please find a sample hypothetical donation and its effect on the donor’s tax liability. The figures indicate how much the real cost of the donation is to the donor versus the face value of the donation. Actual tax benefits may vary, but the cost of the contribution to the donor remains a fraction of the face value of the donation to Southeast Missouri Food Bank.
In the following example, the after-tax cost to the donor of a $10,000 contribution is only $2,650 yet Southeast Missouri Food Bank receives the full face value of the contribution! Because all of the food The Food Bank distributes is donated, every dollar in Southeast Missouri Food Bank's budget helps The Food Bank distribute $10 worth of food items and supplies. A $10,000 donation will allow Southeast Missouri Food Bank to distribute $100,000 worth of food.
A $10,000 tax deductible contribution to Southeast Missouri Food Bank’s Initiatives:
Federal Charitable Deduction (assuming a 35% tax bracket)
$3,500.00
Missouri Charitable Deduction (assuming a 6% tax bracket)
$600.00
Missouri State Tax Credit (assuming 50% for eligible contribution)
$5,000.00
Additional Federal Taxes due to reduction of deductible Missouri State Taxes (35% of $5,000 NAP Tax Credit)
$1,750.00
Out-of-pocket cost
$2,650.00
Please note this serves as an example only. Please consult your tax advisor on how this project will specifically benefit you. Tax credits are available based on eligible tax deductible contributions (minimum $1,000) paid to Southeast Missouri Food Bank for The Food Bank’s strategic Feeding Hope Initiatives.
What’s Next?
Please return the completed application* to:
Southeast Missouri Food Bank
Attn: NAP Tax Credits Application
P.O. Box 1688
Cape Girardeau, MO 63702-1688
*You must enclose a copy of your cancelled check in order for The Food Bank to show the Missouri Department of Economic Development that the donation was actually made.
Executive Director, Karen Green will then sign the application and Southeast Missouri Food Bank will mail both application and proof of donation to the Missouri DED in Jefferson City, so they may issue your Tax Voucher.
About the Neighborhood Assistance Program:
NAP Donor Form
Questions? Please Contact: Karen Green, Executive Director
Phone: 573.651.0400
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