Legislators proposed a plan Thursday to generate more revenue for the University through private donations.
Rep. Gene Pelowski, DFL-Winona, and Sen. John Hottinger, DFL-Mankato, introduced legislation that would give tax credits to Minnesotans who donate money to an accredited public or private university or college in Minnesota. Donors would receive tax credits equalling 50 percent of their gifts, up to $500 per person or $1,000 per joint return.
University President Nils Hasselmo and other university presidents attended a press conference to reveal the plan at the Capitol. Pelowski said the money is needed in an era of declining funding for higher education from the Legislature.
“We need to have other sources of revenue,” Pelowski said. “It is an incentive to give money to schools. In effect, it is giving 50 percent back to schools.” The legislation would generate an estimated $12 million in donations for Minnesota’s schools. Legislators did not speculate how much of that would likely go to the University.
The tax credits could be used when paying taxes in April. A person who owes $100 in taxes and donates $100 to the University, for example, would only have to pay $50 in taxes.
Fourteen states currently have tax credits for individual higher education donations. The legislation introduced Thursday would be very similar to laws in Michigan and Indiana. Tax credits in those states have been very successful in generating revenue, Pelowski said.
Sen. Carol Flynn, DFL-Minneapolis, whose district includes the West Bank campus, is a co-author of the bill.
“This is an effort to encourage private investment in the University,” Flynn said. “This bill says that the University and higher education is very important to our state.”
Linda Berg, of the University of Minnesota Foundation, said the bill has a good chance of passing. The foundation is responsible for monitoring all donations to the University.
“People are very optimistic. This is a budget year, and this is a budget issue,” she said.
The tax credits will also widen the base of donors to higher education, Berg said. “The tax credits will help attract new, younger donors,” Berg said.
Gov. Arne Carlson has not seen the legislation and could not comment on it, said Carlson’s communications director Brian Dietz.
If passed, the law would take affect Dec. 31, 1997.