Evaluating the Endow Kansas Tax Credit Act: Part 4. Interstate Comparison

Earlier this year, HB 2208 was introduced in the Kansas Legislature. The bill, requested by a lobbyist for the Kansas Association of Community Foundations, would enact a tax credit for contributions to certain types of endowments held at Kansas community foundations.

That idea is not new. Currently, seven states offer a similar tax credit, with the first such provision having been enacted in the late 1980s.

This post examines how other states have structured their endowed-giving tax credits. For a summary of HB 2208’s provisions, check out the first post in this series.

Comparison of key provisions

Each of the seven states that currently has an endowment credit implements a unique program with unique rules. However, those programs can be summarized and compared by examining three key provisions:

What is the credit amount?

Illinois1, Iowa2, Maryland3, and Mississippi4 all provide a 25% credit. Kentucky5 provides a 20% credit, as does Montana for outright gifts by eligible business entities6. For certain types of planned gifts, Montana offers a 40% credit7, which is the same rate North Dakota8 uses for all qualifying gifts.

StateTax Credit
Kansas (Proposed)70%
Montana (Planned Gifts)40%
North Dakota40%
Illinois25%
Iowa25%
Maryland25%
Mississippi25%
Kentucky20%
Montana (Outright by Business)20%

Limitations

As in the proposed Endow Kansas Tax Credit Act, other states impose various caps on the amount of credits available.

Statewide limits

Maryland limits the statewide credits available to $250,000 per year9. Kentucky10 and Mississippi11 impose a $1,000,000 statewide limit. Illinois’s statewide limit is $5,000,00012, and Iowa’s is $6,000,00013 (dropping to $3.5 million in 202614).

StateStatewide Limit
Iowa (2025)$6 million
Illinois$5 million
Iowa (2026)$3.5 million
Kansas (Proposed 2026)$3 million
Kentucky$1 million
Mississippi$1 million
Maryland$250,000
Taxpayer limits

Kentucky15 and North Dakota16 limit each taxpayer’s credit to $10,000. Montana taxpayers may only claim a credit of up to $15,000 each17. Maryland’s taxpayer maximum is $50,00018. Illinois19 and Iowa20 both impose a limit of $100,000 per taxpayer (dropping to $50,000 in Iowa’s case starting in 202621), while Mississippi permits up to $125,000 per taxpayer22.

StateTaxpayer Limit
Mississippi$125,000
Illinois$100,000
Iowa (2025)$100,000
Kansas (Proposed)$100,000
Iowa (2026)$50,000
Maryland$50,000
Montana$15,000
Kentucky$10,000
North Dakota$10,000
Community-foundation limits

Two states limit the amount available for each community foundation. Illinois imposes a $750,000 limit (technically, a limit of $3,000,000 in qualifying gifts per community foundation23). Mississippi limits each community foundation to 10% of the statewide total through September 3024. After that, credits are available for gifts on a first-come, first-served basis without regard to which community foundation receives the gift.

StateCommunity Foundation Limit
Illinois$750,000
Kansas (Proposed)$300,000 (10% statewide limit)
Mississippi (Before Sep. 30)$100,000 (10% statewide limit)
Other limits

In addition, three states implement a small-gift reserve, requiring that some portion of the statewide credit limit be set aside for gifts below a certain maximum. Illinois reserves 25% of its statewide limit for gifts of no more than $25,00025. Iowa26 and Maryland27 reserve 10% of their statewide maximums for gifts of no more than $30,000.

StateSmall-Gift ReserveSmall-Gift Max
Illinois25%$25,000
Iowa10%$30,000
Maryland10%$30,000

Iowa’s small-gift reserve expires September 1 of each year. Under IEDA regulations, Iowa also reserves 25% of the statewide limit until September 1 of each year for permanent endowment gifts to community affiliate organizations28, which are groups of individuals who intend to establish a community affiliate endowment fund29.

What gifts qualify?

State endowment tax credits typically specify three criteria for qualifying contributions: the type of gift, the type of fund to which the gift is made, and the type of organization that holds that fund. Some also specify a minimum gift amount.

Eligible gift types

Illinois30, Iowa31, Kentucky32, and Mississippi33 provide their credits for “irrevocable contributions” to eligible funds. Maryland’s credit is available for “irrevocable gifts” of cash or publicly traded securities to eligible funds34.

Montana35 and North Dakota36 have much more complicated rules for eligible types of gifts. Both describe a special class of gifts called “planned gifts,” defined as irrevocable contributions to eligible recipients that use any of the following techniques:

  • Charitable remainder unitrusts
  • Charitable remainder annuity trusts
  • Pooled income fund trusts
  • Charitable lead unitrusts
  • Charitable lead annuity trusts
  • Charitable gift annuities
  • Deferred charitable gift annuities
  • Charitable life-estate agreements
  • Paid-up life insurance policies

In Montana, only such planned gifts can qualify for the tax credit when made by individuals, and the credit rate is 40%37. When made by corporations or pass-through business entities, outright gifts qualify for the credit, but at a reduced rate of 20%38. Estates can qualify for the credit by making gifts of either type39.

North Dakota distinguishes between planned gifts and other types of charitable gifts by extending the credit for planned gifts to a larger class of recipients than other charitable gifts. Donations other than planned gifts must be made to a qualified endowment to receive the credit40; planned gifts are eligible when made to a qualified endowment or a qualified nonprofit organization41.

Minimum gift amount

Four of the seven states with an income-tax credit for endowment gifts do not impose a minimum gift amount.

Maryland requires gifts be worth at least $50042, Mississippi requires gifts be at least $1,00043, and the credit for outright gifts by individuals in North Dakota is only available if the value is at least $5,00044.

StateMinimum Gift Amount
North Dakota (Outright by Individuals)$5,000
Mississippi$1,000
Kansas (Proposed)$500
Maryland$500
Illinois–
Iowa–
Kentucky–
Montana–
North Dakota (Other Gifts)–

Eligible fund types

Iowa45 and Kentucky46 require that gifts be made to a “permanent endowment fund,” but they do not specially define that term.

Montana47 and North Dakota48 both require a gift be made to a “permanent, irrevocable fund.” In North Dakota, a “permanent, irrevocable fund” is one

comprising cash, securities, mutual funds, or other investment assets established for a specific charitable, religious, educational, or eleemosynary purpose and invested for the production or growth of income, or both, which may either be added to principal or expended49.

Montana’s definition of “permanent, irrevocable fund” begins identically, but diverges after the phrase “eleemosynary purpose.” In Montana, the fund must be “managed, invested, and appropriated pursuant to [UPMIFA.]” Additionally, funds “from which contributions are expended directly for constructing, renovating, or purchasing operational assets, such as buildings or equipment” do not qualify50.

The three remaining states—Illinois, Maryland, and Mississippi—define fund eligibility by reference to what type of organization holds it (see below), the intended duration of the fund (“perpetuity”), and the use of the fund:

  • Illinois: The fund must “provide[] charitable grants exclusively for the benefit of residents of [Illinois] or charities and charitable projects located in [Illinois]”51.
  • Maryland: The fund must be “used for the benefit of charitable causes in [Maryland]”52.
  • Mississippi: The fund must “provide[] benefit to charitable causes in Mississippi”53.

Illinois and Maryland additionally impose a limit on how much can be spent from an eligible fund each year (7% and 5%, respectively). And, as discussed below, Illinois excludes donor-advised funds from eligibility.

Qualifying organization types

Five states—Illinois56, Iowa57, Kentucky58, Maryland59, and Mississippi60—restrict the credit to qualifying gifts made to a community foundation or similar organization. Generally, these states require the community foundation to satisfy three key requirements to participate in the program:

  • Be organized or operate in the state offering the credit
  • Be tax-exempt under section 501(c)(3) of the Internal Revenue Code, be publicly supported as described in section 170(b)(1)(A)(vi), or both
  • Comply with the Community Foundation National Standards

Maryland, recognizing that its statute limits eligible funds to those that are used “for the benefit of charitable causes in [Maryland],” omits the first of the above three requirements for what it calls “eligible community foundations.” However, unique among these state credits, it requires that eligible organizations be

commonly known as a community trust, fund, endowment, or foundation or by another similar name that conveys the concept of a capital or endowment fund to support charitable activities in the community or area that it serves.61

Kentucky62 and Mississippi63 additionally require as part of their definitions of “qualified community foundations” that the foundation be certified by the relevant administrative agency in the state.

Mississippi’s definition of “qualified community foundation” is clearly the one on which the Endow Kansas Tax Credit Act’s definition of the same term was based, but Kentucky might have provided the better model as the drafters wrestled with how to best express the concepts of geography-based field-of-interest funds and affiliates.

Kentucky’s statute authorizes the credit for irrevocable contributions “to a permanent endowment fund of a qualified community foundation, or county-specific component fund, or affiliate community foundation.”64 These terms are defined as follows:

  • Qualified community foundation: A philanthropic foundation organized or operating in [Kentucky] that: (a) Substantially complies with the national standards for community foundations . . .; (b) Is classified as a 501(c)(3) tax-exempt organization by the Internal Revenue Service; and (c) Is certified by the [Endow Kentucky Commission]65.
  • County-specific component fund: A fund of a qualified community foundation that is restricted to serve an individual county66.
  • Affiliate community foundation: A philanthropic foundation organized or operating to serve an identified geographic area within [Kentucky], and which: (a) Is affiliated with a qualified community foundation; and (b) Is certified by the [Endow Kentucky Commission]67.

Meanwhile, Montana and North Dakota forego any reference to community foundations. In Montana, the credit is available for planned gifts to permanent, irrevocable funds held by a Montana-incorporated or Montana-established organization that is tax-exempt under section 501(c)(3) of the Internal Revenue Code or is a bank or trust company holding the fund on behalf of such an organization68.

North Dakota uses a similar provision, but expands its coverage to include certain tax-exempt organizations in neighboring states within 5 miles of a North Dakota city of 5,000 or more in which there is no hospital69.

Procedural provisions

In addition to the substantive provisions outlined above, state endowment tax credits also differ widely in regard to procedures.

Administration

Who administers a state’s endowment-credit program varies. Most states rely on state agencies for this role, but some bring in outside organizations.

State agencies

Illinois, Montana, and North Dakota each assign the task to their state tax agency. Kentucky assigns some administrative tasks to the Kentucky Department of Revenue70, too, but it also created a special Endow Kentucky Commission for other tasks71.

Iowa relies on its Economic Development Authority72, and Maryland assigns administration to its Department of Housing & Community Development73.

Non-state administrators

In addition to the Iowa Economic Development Authority, Iowa specifically tasks the IEDA with working with the Iowa Council of Foundations for some aspects of the Endow Iowa program74.

And then there’s Mississippi

Unique among the seven states, Mississippi assigns administering its program entirely to an outside organization: the Mississippi Association of Grantmakers “or its successor entity.”75 As it happens, during the enactment of Mississippi’s program, the Mississippi Association of Grantmakers merged with the Mississippi Center for Nonprofits, so this role is now played by the resulting Mississippi Alliance of Nonprofits and Philanthropy (MANP).

Under Mississippi’s statute, MANP, “in cooperation with qualified community foundations,” must:

  • Develop and maintain the records necessary to determine the priority for awarding credits to each qualified community foundation.76
  • Develop application forms, procedures for reviewing application forms, procedures for issuing tax credits, and reporting procedures.77
  • Review tax-credit applications and associated documents.78
  • Provide lists of approved applications to qualified community foundations.
  • Monitor all Endow Mississippi tax credits and certify them to the Mississippi Department of Revenue, providing the Department of Revenue with “all data required to ensure that qualified taxpayers receive any credit to which they are entitled.”79
  • Determine the process for the allocation of any available tax credits.80

MANP has even promulgated regulations that, among other things, allocate to itself a fee equal to 1% of all qualifying contributions during 2019 and 0.5% of later-year contributions.

Certification of participating organizations

Two states—Montana and North Dakota—have no certification requirements for participating in their respective programs.

Illinois requires community foundations to apply to the Department of Revenue for authority to issue certificates of receipt under its program81. This certification must be renewed annually82.

Iowa and Mississippi rely on non-state agencies (at least in part) to certify eligible community foundations. The Iowa Economic Development Authority, “in collaboration with the Iowa council of foundations,” determines whether a community foundation qualifies for the program83. In Mississippi, community foundations must be “recognized by the Mississippi Association of Grantmakers” as meeting the law’s requirements84.

Meanwhile, Kentucky ties certification of community foundations for its tax-credit program to a related program of capacity-building grants85. A community foundation that is certified for the latter is also certified for the former. The Endow Kentucky Commission performs a biennial review of each participating foundation, affiliate, or county-specific component fund86.

Maryland is unique in certifying specific funds for its tax-credit program rather than community foundations. Eligible community foundations submit qualified permanent endowment funds for approval by the Department of Housing and Community Development87.

Application

Most of the state endowment-credit programs require that taxpayers apply for preauthorization for a qualifying gift. In Illinois88, Kentucky89, and Maryland90, the taxpayer applies directly with the state agency overseeing the program for preapproval. Once approved, Kentucky91 and Maryland92 require the taxpayer to notify that agency after a gift has been made. Illinois requires the qualified community foundation to notify the agency after a preapproved gift is made93.

Mississippi leans more heavily on qualified community foundations throughout the application process. The taxpayer applies for preapproval through the qualified community foundation, which submits the application to MANP94. Once the gift is preapproved, the qualified community foundation notifies the taxpayer95 and, once a gift is received, the foundation reports the gift to MANP96.

Iowa, Montana, and North Dakota do not require preauthorization. In Iowa, a taxpayer applies for approval of a credit through the community foundation he or she gave to. In Montana and North Dakota, taxpayers simply report their qualifying contributions on a schedule attached to their normal tax return.

Carryforward

Most states with an endowment tax credit provide that, if it completely eliminates a taxpayer’s tax liability for a year, the balance can be carried forward for up to five years.

North Dakota97 permits a three-year carryforward of its credit, and Montana98 does not allow a carryforward at all.

StateCarryforward Duration
Illinois995 years
Iowa1005 years
Kansas (Proposed)5 years
Kentucky1015 years
Maryland1025 years
Mississippi1035 years
North Dakota3 years
Montana–

Miscellaneous notes by state

I had originally planned to include summaries of each state’s endowment-credit program at this point, but this article has gone on for long enough! Instead, here are some miscellaneous notes I found interesting during my research.

Illinois

Illinois enacted its endowment-tax-credit program in 2024, and 2025 is the first year the credit is available.

Iowa

Until 2010, Iowa taxpayers could claim both a state tax deduction and the state tax credit for Endow-Iowa-eligible gifts.

As I was writing this article, the Iowa Legislature was considering repealing the Endow Iowa program. Instead, they amended it as noted above (and in a few other ways).

Kentucky

Kentucky’s statute includes an odd ambiguity. KRS 141.438(2) states:

A taxpayer providing an endowment gift to a permanent endowment fund of a qualified community foundation, or county-specific component fund, or affiliate community foundation, which has been certified under KRS 147A.325, and meeting the requirements of subsection (7) of this section, may claim a credit[.]

Are the three eligible recipients “a permanent endowment fund of a qualified community foundation,” a “county-specific component fund,” and an “affiliate community foundation”? Or are they “a permanent endowment fund of” a qualified community foundation, county-specific component fund, or affiliate community foundation?

Maryland

Under Maryland’s program, any unused portion of its statewide limit on credits is rolled over into the next tax year.

Although the statute that created the Endow Maryland program imposes a statewide limit on credits of $250,000, the Department of Housing and Community Development’s regulations limit statewide donations to $250,000, equivalent to a cap on credits of $62,500.

Mississippi

In Mississippi, any unused portion of its statewide limit on credits rolls over for up to five years.

Footnotes

  1. 35 Ill. Comp. Stat. 60/170-10(a) ↩︎
  2. Iowa Code § 15E.305(1) ↩︎
  3. Md. Code, Tax-Gen. § 10-736(c)(1) ↩︎
  4. Miss. Code Ann. §  27-7-207(1) ↩︎
  5. Ky. Rev. Stat. § 141.438(3) ↩︎
  6. Mont. Code Ann. § 15-31-161(1) ↩︎
  7. Mont. Code Ann. § 15-30-2328(1) ↩︎
  8. N.D. Cent. Code § 57-38-01.21(2)(a)–(b) ↩︎
  9. Md. Code, Tax-Gen. § 10-736(c)(5) ↩︎
  10. Ky. Rev. State § 141.438(6) ↩︎
  11. Miss. Code Ann. § 27-7-207(2) ↩︎
  12. 35 Ill. Comp. Stat. 60/170-10(b) ↩︎
  13. Iowa Code § 15E.305(2) ↩︎
  14. 2025 Iowa Acts ch. 136, div. XII, § 92 ↩︎
  15. Ky. Rev. Stat. § 141.438(3) ↩︎
  16. N.D. Cent. Code § 57-38-01.21(2)(a)–(b) ↩︎
  17. Mont. Code Ann. § 15-30-2328(1) ↩︎
  18. Md. Code, Tax-Gen. § 10-736(c)(3), Md. Code Regs. 05.14.02.05(E)(2) ↩︎
  19. 35 Ill. Comp. Stat. 60/170-10(c) ↩︎
  20. Iowa Code § 15E.305(2)(a) ↩︎
  21. 2025 Iowa Acts ch. 136, div. XII, § 93 ↩︎
  22. See Miss. Code Ann. § 27-7-207(1)(c) ↩︎
  23. 35 Ill. Comp. Stat. 60/170-10(d) ↩︎
  24. Miss. Code Ann. § 27-7-209 ↩︎
  25. 35 Ill. Comp. Stat. 60/170-10(e) ↩︎
  26. Iowa Code § 15E.305(2)(b) ↩︎
  27. Md. Code, Tax-Gen. § 10-736(c)(4) ↩︎
  28. Iowa Admin. Code r. 261-47.4(1) ↩︎
  29. See Iowa Admin. Code r. 261-47.2 ↩︎
  30. 35 Ill. Comp. Stat. 60/170-10(e), 60/170-5 ↩︎
  31. Iowa Code §§ 15E.305(1), 15E.303(5) ↩︎
  32. Ky. Rev. Stat. §§ 141.438(2), 147A.310(4) ↩︎
  33. Miss. Code Ann. §§ 27-7-207(1), 27-7-205(b)–(c) ↩︎
  34. Md. Code, Tax-Gen. § 10-736(b)(1), (a)(3) ↩︎
  35. Mont. Code Ann. §§ 15-30-2328(1), 15-30-2327(1)(b), (3) ↩︎
  36. N.D. Cent. Code § 57-38-01.21(2)(a), (1)(b) ↩︎
  37. Mont. Code Ann. § 15-30-2328(1) ↩︎
  38. Mont. Code Ann. § 15-31-161(1) ↩︎
  39. Mont. Code Ann. § 15-30-2329 ↩︎
  40. N.D. Cent. Code § 57-38-01.21(2)(b) ↩︎
  41. N.D. Cent. Code § 57-38-01.21(2)(a) ↩︎
  42. Md. Code, Tax-Gen. § 10-736(b)(1), (a)(3) ↩︎
  43. Miss. Code Ann. §§ 27-7-207(1), 27-7-205(b)–(c) ↩︎
  44. N.D. Cent. Code § 57-38-01.21(2)(b) ↩︎
  45. Iowa Code §§ 15E.305(1), 15E.303(5) ↩︎
  46. Ky. Rev. Stat. § 141.438(2) ↩︎
  47. Mont. Code Ann. §§ 15-30-2328(1), 15-30-2327(1)(b) ↩︎
  48. N.D. Cent. Code § 57-38-01.21(2), (1)(c) ↩︎
  49. N.D. Cent. Code § 57-38-01.21(1)(a) ↩︎
  50. Mont. Code Ann. §§ 15-30-2328(1)(a)(i) ↩︎
  51. 35 Ill. Comp. Stat. 60/170-5 ↩︎
  52. Md. Code, Tax-Gen. § 10-736(a)(5) ↩︎
  53. Miss. Code Ann. 27-7-205(d) ↩︎
  54. See Miss. Code Ann. 27-7-205(d) ↩︎
  55. See 35 Ill. Comp. Stat. 60/170-5 ↩︎
  56. 35 Ill. Comp. Stat. 60/170-10(a), 60/170-5 ↩︎
  57. Iowa Code §§ 15E.305(1), 15E.303(4)–(5) ↩︎
  58. Ky. Rev. Stat. § 141.438(2) ↩︎
  59. Md. Code, Tax-Gen. § 10-736(b), (a)(4) ↩︎
  60. Miss. Code Ann. § 27-7-207(1) ↩︎
  61. Md. Code, Tax-Gen. § 10-736(a)(4) ↩︎
  62. Ky. Rev. Stat. § 141.438(2) ↩︎
  63. Miss. Code Ann. 27-7-205(a)(vii) ↩︎
  64. Ky. Rev. Stat. § 141.438(2) ↩︎
  65. Ky. Rev. Stat. § 147A.310(6) ↩︎
  66. Ky. Rev. Stat. § 147A.310(3) ↩︎
  67. Ky. Rev. Stat. § 147A.310(1) ↩︎
  68. Mont. Code Ann. §§ 15-30-2328(1), 15-30-2329, 15-31-161(1), 15-30-2327(1)(c) ↩︎
  69. N.D. Cent. Code § 57-38-01.21(1)(c) ↩︎
  70. E.g., Ky. Rev. Stat. § 141.438(8) ↩︎
  71. Ky. Rev. Stat. § 147A.330 ↩︎
  72. E.g., Iowa Code § 15E.305(4); Iowa Code § 15E.1 (defining “authority” for purposes of Chapter 15E) ↩︎
  73. E.g., Md. Code, Tax-Gen. § 10-736(c)(1); Md. Code, Tax-Gen. § 10-736(a)(2) ↩︎
  74. Iowa Code § 15E.303(4) ↩︎
  75. E.g., Miss. Code Ann. § 27-7-211(1) ↩︎
  76. Miss. Code Ann. § 27-7-209 ↩︎
  77. Miss. Code Ann. § 27-7-211(1) ↩︎
  78. Miss. Code Ann. § 27-7-211(4) ↩︎
  79. Miss. Code Ann. § 27-7-211(5) ↩︎
  80. Miss. Code Ann. § 27-7-213(2) ↩︎
  81. 35 Ill. Comp. Stat. 60/170-20 ↩︎
  82. Ill. Admin Code tit. 86, § 1050.300(b) ↩︎
  83. Iowa Code § 15E.303(4) ↩︎
  84. Miss. Code Ann. § 27-7-205(a) ↩︎
  85. See Ky. Rev. Stat. §§ 141.438(2), 147A.325, 147A.320 ↩︎
  86. Ky. Rev. Stat § 147A.325(2)(b) ↩︎
  87. Md. Code Regs. 05.14.02.03(A) ↩︎
  88. 35 Ill. Comp. Stat. 60/170-15(a) ↩︎
  89. Ky. Rev. Stat. § 141.438(7)(a) ↩︎
  90. Md. Code, Tax-Gen. § 10-736(c). Note that under Md. Code Regs. 05.14.02.05(A)(1), taxpayers “submit a request for certification through the community foundation on forms provided by the Department.” ↩︎
  91. Ky. Rev. Stat. § 141.438(7)(c) ↩︎
  92. Md. Code Regs. 05.14.02.05(B)(2) ↩︎
  93. 35 Ill. Comp. Stat. 60/170-25(f) ↩︎
  94. Miss. Code Ann. § 27-7-211(3) ↩︎
  95. Miss. Code Ann. § 27-7-211(4) ↩︎
  96. Endow Miss. Program Impl. Regs. § 6(F) (June 12, 2019) ↩︎
  97. N.D. Cent. Code § 57-38-01.21(7) ↩︎
  98. Mont. Code Ann. §§ 15-30-2328(2), 15-30-2329, 15-31-161(1) ↩︎
  99. 35 Ill. Comp. Stat. 5/241(c) ↩︎
  100. Iowa Code § 15E.305(1) ↩︎
  101. Ky. Rev. Stat. § 141.438(4) ↩︎
  102. Md. Code, Tax-Gen. § 10-736(b)(2) ↩︎
  103. Miss. Code Ann. § 27-7-207(3) ↩︎