Attention Nonprofits in Puerto Rico! New Tax Incentives for Charitable Contributions

April 12, 2012 10:20 PM
by / Topics: Uncategorized

On January 31, 2011, Puerto Rico adopted a new Internal Revenue Code (2011 PR Tax Code) that contains amendments to the section governing deductions for charitable contributions.   Effective immediately for tax years beginning on or after January 1, 2011, the 2011 PR Tax Code increases the allowed deduction to individuals and corporations for donations made to nonprofit organizations in Puerto Rico.

For individuals, this means a 100% deduction of the amount donated, up to 50% of the taxpayer’s total adjusted gross income for the taxable year.   For corporations, the amount of charitable contributions that they can deduct increased from 5% to 10%.

The amendment to the charitable contributions section of the 2011 PR Tax Code was the result of a collaborative, educational effort initiated and led by Flamboyan Foundation and Red de Fundaciones with  key support from volunteer professional experts and government officials, to stimulate giving and strengthen the nonprofit sector in Puerto Rico.

For Nonprofit Organizations

Make sure your nonprofit organization is in compliance with the State and Treasury Departments of Puerto Rico. If you are unsure whether or not your organization is in compliance, use the provided resource named “Hoja de Cotejo – OSFL Cumplimiento” to learn more. Below, find information on the new law and useful tools for developing fundraising messages and strategies to take advantage of it.

Nonprofit organizations which educate donors about the 2011 PR Tax Code can potentially increase their giving.  A better law is an incentive, but a law in and of itself does not promote giving, so organizations should engage current and potential investors strategically.  Here are some suggestions for doing so:

  • Invite current and potential donors to see your work in action.
  • Create a one page organizational overview or frequently asked questions document for current and potential donors.
  • Know your budget and be prepared to answer questions about how donor’s investment dollars are spent.
  • Send information to current donors about the new tax code and ask them to share it with a friend.
  • Share your ideas with us and we will post them on our website.

Resources (only available in Spanish):