Support Children’s Scholarships for
Quaker Education Through Tax Credits

The Commonwealth of Pennsylvania offers businesses in the state a unique opportunity to reduce tax liability by contributing to registered scholarship organizations. Gifts to scholarships at our school can qualify for a 90% tax credit on the amount contributed.

Like EITC, the OSTC program provides tax credits to eligible businesses contributing to an
Opportunity Scholarship Organization. Business contributions are then used to provide tuition assistance through scholarships at our school.

A tax credit directly reduces the amount of taxes owed, providing a dollar-for-dollar reduction in tax liability. A tax credit is different from a tax deduction. With a tax deduction, you reduce the amount of income subject to taxes.

What are some of the basics about how this program works with The Friends Collaborative?
You agree to contribute the same amount for two consecutive years
You receive a tax credit equal to 90% of your contribution
You offset your PA state tax liability
You receive a K-1 form in March of the year following your contribution 

No, the Earned Income Tax Credit is a completely different tax credit that is provided at the federal level. The Educational Improvement Tax Credit is a Pennsylvania tax credit program. Although they share the same acronym, the two programs are completely separate.

• You agree to contribute the same amount for two consecutive years
• You receive a tax credit equal to 90% of your contribution
• You offset your PA state tax liability
• You receive a K-1 form in March of the year following your contribution
   

Individuals may join a Special Purpose Entity (SPE) provided through The Friends Collaborative (TFC). The SPE operates as a pass-through mechanism for their personal tax liability.

As members of an SPE, individuals may receive a tax credit for 90% of their contribution amount. It may also be possible to claim a federal charitable deduction for the remaining 10% of the out-of-pocket donation.
 

A straightforward way to participate is to partner with The Friends Collaborative (TFC), founded in 2016 by a group passionate about expanding access to Quaker education. TFC currently holds tax credits allocated by the state of Pennsylvania. It does this by forming several Special Purpose Entities (SPEs) to raise scholarship dollars. Businesses contributing to one of TFC’s Special Purpose Entities will receive a tax credit of 90% of the donation.

TFC provides an efficient, streamlined process for participation. They offer an electronic way to donate and receive a credit when you file your taxes in April.

Businesses may also apply directly to the Pennsylvania Department of Community and Economic Development. Application information and deadlines can be found here:

https://dced.pa.gov/programs/educational-improvement-tax-credit-program-eitc

My business operates in PA and pays one or more of the following taxes:

• Corporate Net Income Tax
• Personal Income Tax
• Capital Stock/Foreign Franchise Tax
• Bank Shares Tax
• Title Insurance & Trust Company Shares Tax
• Insurance Premium Tax (excluding unauthorized, domestic/foreign marine)
• Mutual Thrift Tax
• Malt Beverage Tax
• Surplus Lines Tax

Or, I am an individual and have a Pennsylvania tax liability and accredited investor status.
 

The minimum contribution for individuals and businesses participating through an SPE is $3,000. There is no limit on the amount that can be contributed.
 

Any individual or business with a PA income tax liability is eligible to participate. The starting point is to know your annual PA tax liability. We recommend that you check with your accountant or tax advisor, if you use one, or look up your annual PA tax liability.
Here is a tax liability calculator that can help. This tool provides information only and does not serve as tax or legal advice. For guidance tailored to your individual tax situation, please consult with your tax advisor.
 

When tax credits become available through The Friends Collaborative (TFC), they are issued on a first-come, first-served basis. In general, there are rounds available in early spring and early fall. Businesses and individuals wishing to participate through TFC are asked to contact Lee Ann Sullivan at lasullivan@wcfriends.org for more information about the tax credit's availability.
 

1. Speak with Lee Ann Sullivan (lasullivan@wcfriends.org) at West Chester Friends School and request to participate.

• Include the dollar amount of the intended contribution
• Your name as it appears on your taxes
• A salutation (if different from your name for taxes)
• E-mail address for all contacts related to your participation
• Confirm a two-year commitment (in some cases, we may be able to offer a one-year participation)

2. You will receive electronic information from The Friends Collaborative. Log in to the secure online portal: fill out the participant questionnaire
3. Sign the digital contract
4. ACH payment is processed
5. In March of the following year, a K-1 will be issued for use when filing your PA tax return
6. In the following year, repeat steps 2-5!