Asking a Massachusetts banker to talk about their favorite community development corporation (CDC) is a little like asking a parent to pick their favorite child, but last year many Bay State banks took advantage of a new tax credit program to double their contributions to those organizations involved in developing their communities.

Consider, for instance, Greenfield Savings Bank, which more than doubled its contribution to the Franklin County CDC and gave $35,000.

“We just love this CDC,” said Denise Coyne, the bank’s executive vice president and COO. “We partner with them on loans, they refer people looking for business loans, and we’ll refer to them because they may do loans we may not want to do, do training for people starting up, we participate on loans with them. We’ve been involved on a number of different levels for a long time.”
Greenfield was able to kick up their financial support of that CDC thanks to the new Community Investment Tax Credit (CITC).

Under this program, a CDC applies to the state department of housing and community development first for recognition as a certified CDC and second, for an allocation of tax credits. Once the organization is granted those credits, the CDC can turn around and use those as an incentive to solicit more donations from the private organizations and individuals. A bank or other private organization or person that donates to that CDC receives a tax credit for 50 percent of the donation, so in the case of Greenfield Savings, the out-of-pocket cost to the bank actually wound up in the neighborhood of $17,500.

“In addition, you get to claim the federal tax deduction, which depending on your tax bracket, could be $750 out of $1,000,” said Joe  Kriesberg, executive director of the Massachusetts Association of Community Development Corporations (MACDC). “When people walk through that math a little bit, once you understand the state and federal tax benefit, that motivates a lot of people to give a lot more than they would otherwise.”

Boston Private Bank & Trust is another bank that was able to double its contribution last year, giving $110,000 to 16 CDCs in its footprint.

“When CITC came along, we saw that as a great opportunity to increase our support for these really critical partners of ours,” said Sarah Lamitie, Boston Private’s vice president and community investment officer.

Those partners included the Asian Community Development Corporation, the Codman Square Neighborhood Development Corporation and the Neighborhood Developers in Chelsea.
The Neighborhood Developers were also among the beneficiaries chosen by Citizens Bank when it took advantage of the CITC, said Jerry Sargent, president of Citizens Bank, Massachusetts.
“I think [the tax credit is] going to be an important one,” he said. “It’s a piece of a much larger initiative that we have in place. Last year, we set to do $1 billion in CRA lending across our footprint over the next five years. This fits into a piece of a broader strategy.”

Room To Grow
The tax credit was signed into law in 2012 as part of a larger economic development bill, and 2014 marked the first year the CITC went into effect.

Kriesberg said MACDC had been studying a number of similar initiatives in other states and cities for a few years before it filed the legislation that eventually became law.

“We knew we wanted to leverage public and private support, not only because you can generate more resources, but also because we believe the best CDCs around the country are those that have demonstrated an ability to work with both the public and private sectors,” he said.

Last year, 36 CDCs, along with MACDC and a local initiative support corporation, were recognized as certified CDCs and allotted tax credits to incentivize private donations. All told, the initiative spurred donations totaling $4.8 million from 1,100 donors. While banks represented some of the biggest donors, Kriesberg estimated that about 70 percent of donors were individuals taking advantage of the tax credit to support a local CDC.

The program is poised to gather steam in the years ahead. This year, Kriesberg said, 44 CDCs were certified to use these tax credits in soliciting donations, and he’s hopeful that more of the state’s 54 CDCs will eventually attain that status.

And to other potential donors, he added: “We’re hopeful that some of the larger banks will join the program. Even if you’re out of state, you can still participate in the program. It’s really open to anybody who’s doing business in or cares about Massachusetts.”