Giving Thought: Colorado makes it easy to support young children
December 17, 2018
As December progresses, many of us are considering our charitable giving for the year. I have six words of advice for you: Colorado Child Care Contribution Tax Credit.
In our state, legislators in both political parties have agreed that chronically underfunded child care providers deserve some help. Twenty years ago, they created an incentive for taxpayers (parents of preschool-aged children, in particular) to donate to their child care centers and other organizations that support young children, including afterschool programs and homeless youth shelters. During this year's legislative session, lawmakers extended the incentive for another five years.
Here's how this generous tax credit works. If, for example, you decide to donate $100 to an early-childhood education program, then half of that gift, in this case $50, would be subtracted from your Colorado state income tax bill. So, while the gift ends up costing you just $50, the qualified child care program receives $100 to put toward salaries, books, supplies or playground equipment.
In 2016, this tax credit resulted in more than $50 million donated to early childhood centers statewide. That's a big deal because, unlike publicly funded K-12 schools, preschools and child care centers are mostly funded through parents' tuition payments. And those payments rarely provide enough revenue to fully support the number of adults it takes to watch children from birth up to 5 years old. Simply put, high-quality child care is expensive, and the entire sector is plagued by both low pay and — no surprise — high turnover.
(To be clear, wages in Colorado's K-12 sector aren't up to par either, but that's a different subject.)
The child care tax credit has enormous potential as a financial lifeline for preschools and child care centers.
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"This is a really powerful incentive to all Colorado taxpayers, both individuals and companies," said Bill Jaeger, vice president for early childhood and policy initiatives at the Colorado Children's Campaign.
During the 2018 session of the Colorado General Assembly, Jaeger advocated successfully for a five-year extension of the tax credit through 2024. He knows that investments in early-childhood education pay off handsomely for society in general. Research shows that at-risk children enjoy better health and productivity in adulthood, along with less likelihood of involvement with law enforcement, when they've had early social, developmental and cognitive attention and instruction.
So, why does this matter to us? Well, Aspen Community Foundation has long been committed to early childhood education, recognizing it as an important way to overcome the mounting and lasting achievement gaps between children who come to school prepared and those who don't. In addition, as our communities continue to grow, it is vital to ensure the availability of quality, affordable early-childhood education. It helps the children, it serves the families and it increases the economic well-being of our valley.
Aspen Community Foundation also is committed to building philanthropy to support key issues in the region. The Child Care Contribution Tax Credit can be used to support an array of early childhood education providers and other qualified nonprofits. It alsocan be used to help with our grant-making to these organizations. Visit our website for a list of qualified early childhood education programs in the area.
Lawmakers on both sides of the aisle support the notion of directing money to early-childhood programs without raising taxes or creating a new government program. But thus far the vast potential of this tax incentive hasn't been realized.
Michelle Oger, director of the Blue Lake Preschool near El Jebel, says the Child Care Contribution Tax Credit is a wonderful but under-utilized tool. Oger and her staff depend heavily on grants, donations and fundraising, so she's surprised at how few Blue Lake Preschool parents take advantage of the opportunity. The school sends out information about the credit, but Oger suspects that most parents are too busy to pay close attention.
"It's a great thing for us and it's a great thing for them," she said. "It really provides a huge savings to the donor, but not a lot of people are aware of it."
Don't forget to ask your tax adviser about this tax credit, which serves an excellent purpose. A quick internet search also will yield plenty of information.
Today's children are tomorrow's adults, and a donation toward their success is a smart investment in the future. Please consider a gift this giving season.
Tamara Tormohlen is executive director of Aspen Community Foundation.
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