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Tax Breaks Given for Scholarship Donations

July 31, 2008 By:
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The Pennsylvania General Assembly and Gov. Ed Rendell have expanded a seven-year-old state program that allows businesses to receive tax breaks for donating to selected school scholarship foundations, something which in effect allows the companies themselves, rather than Harrisburg, to decide how the money is spent.

This program has allowed the Foundation for Jewish Day Schools, a nonprofit entity run by the Jewish Federation of Greater Philadelphia, to award $2.6 million in needs-based scholarships to Jewish day schools and preschool programs.

Similar foundations are run by the Jewish federation in Pittsburgh, as well as in several other locales.

The state's school budget for the fiscal year, which the legislature and governor agreed upon earlier this month, opened what's known as the Educational Improvement Tax-Credit Program to "S" corporations and partnerships -- businesses in which the owners pay state taxes personally.

This means that, for the first time, many law firms, medical practices and other ventures operating on a partnership model will have the opportunity to avail themselves of a total of $75 million in state tax credits. Previously, only firms that followed a more traditional corporate structure were eligible for credits on roughly half-a-dozen state taxes.

Brian Mono, manager of allocations for Federation, said that one result of the change is that more businesses could be vying for a limited pool of tax credits.

"There's a limited amount of money, and it's a first-come, first- served opportunity," said Mono.

Change in the Commonwealth 
School-choice advocates spent the better part of the 1990s advocating for change in the commonwealth.

While Pennsylvania does not offer vouchers -- the use of tax dollars to cover tuition for private schools -- in 2001, the state established the EITC program as a means to offer families the financial wherewithal to send their children to private schools.

"Education shouldn't be one-size-fits-all," said Stacy Henninger, a spokeswoman for the REACH (Road to Educational Improvement Through Choice) Foundation, a Harrisburg-based group that promotes the EITC program and lobbies annually for an increase in available tax credits.

"We're for any choice that parents want to make: charter school, cyber charter school, home tutoring, boarding school," continued Henninger.

EITC is run by the Pennsylvania Department of Community and Economic Development, which approves the scholarship organizations and receives applications for the tax credits.

In the 2007-08 academic year, the Foundation for Jewish Day Schools in Philadelphia awarded more than $425,000 to more than 275 students at Abrams Hebrew Academy, the Jack M. Barrack Hebrew Academy, the Raymond and Ruth Perelman Jewish Day School, Politz Hebrew Academy, Stern Hebrew High School and the Torah Academy of Greater Philadelphia.

Most of these schools have their own scholarship funds, which can cover up to 70 percent of tuition, but Mono explained that the foundation's scholarships help finance the remaining costs for the neediest families.

"It's a no-cost opportunity," said Robert Landmand, a foundation board member.

Several years ago, the EITC program was amended to include pre-kindergarten programs.

Since then, the foundation has granted $347,035 in awards to more than 84 such students enrolled in roughly 20 Jewish institutions. Last year, the foundation allocated $120,000 to the pre-K, EITC program.

There's a third EITC avenue that allows companies to fund innovative public-school programming.

Paul Silberberg, president of CMS Companies, a Wynnewood-based financial-services firm, has participated in the EITC program since the outset.

"For us, it's a no-brainer. We get to direct the dollars exactly where we'd like to see them invested," said Silberberg.

Then, he added: "I don't understand why more people don't do it."


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