A new state tax credit program for Illinois Donors.

The Community Foundation for McHenry County is excited to announce the Illinois Gives Tax Credit Act which incentivizes up to $100 million in new charitable giving over the next five years by authorizing a 25% state income tax credit for charitable donations to eligible permanent endowments held by dozens of qualified community foundations across Illinois. The program began on January 1, 2025. The Community Foundation for McHenry County looks forward to working with donors who would like to participate in this new tax credit.

What is the official name of the legislation?
Illinois Gives Tax Credit Act
HB4951/Public Act 103-0592, Article 170

What does it do?
Provides a 25% State of Illinois charitable income tax credit to donors who contribute to an endowed fund at an approved community foundation in Illinois. The Community Foundation for McHenry County is approved to accept gifts.

Who qualifies as a donor?
Any Illinois taxpayer, including individual and joint filers, corporations, partnerships, trusts, and estates.

Do I have to be an Illinois resident?
No, as long as you pay Illinois income tax.

What is an eligible gift?
A donation to an endowed fund at an approved Illinois community foundation.

What assets can be gifted?
Any asset that a community foundation already accepts per that Community Foundation’s Gift Acceptance Policy.

What is an endowed fund?
An endowed fund is a fund that is designed to last forever. It is invested in such a way that it will be able to make distributions, more commonly referred to as grants, to charitable organizations while preserving the principal.  Over time, endowed funds tend to grant out more money than was originally donated while the fund’s principal balance grows as well. Endowments are a powerful tool to support long-term sustainability and can also be a very meaningful way for individuals and organizations to secure their legacy.

What types of funds can be endowed?
Eligible endowments for this tax credit include designated, field of interest, scholarship, and agency funds.

Are donor advised funds eligible endowments?
No.

Can a donor create a new endowed fund at The Community Foundation to be the recipient of these eligible gifts?
Yes. A donor can choose to donate to an existing endowment or create a new endowed fund.

Can I donate to directly support the work of The Community Foundation?
Yes. We have several existing funds available which support our work and would be happy to discuss these with you.

Are there limits or caps on the credit?
Yes. The cost to the State is capped at $5 million. The maximum tax credit per filer is $100,000, but to get that tax credit, you’d have to donate $400,000 because it’s a 25% credit. The program will sunset after 5 years (at the end of 2029) unless it is extended beyond that date by the General Assembly.

Can one community foundation's donors claim the entire $5m?
No. IL Gives Act caps the amount any one community foundation may receive at 15% of the total, which is intended to ensure that rural areas and areas with less community wealth are able to benefit. At its maximum potential, this may generate $3 million in additional private donations per year for any single community foundation. Especially in rural areas, this can make a sizeable difference.

Can these endowed funds benefit charities outside of Illinois?
No. Each endowed fund that receives gifts eligible under this Act must award grants to charities for their operations and programming that occur within the State of Illinois.

Are all charitable gifts to any charitable organization eligible for this tax credit?
No. Only gifts to permanent endowments at approved community foundations are eligible to get the state tax credit (until we reach the statewide cap of $5M). Donor-advised funds are not eligible. Gifts to other charities, private foundations, and family foundations are not eligible for this tax credit.