Qualified Donations & Tax Credit Approval Process
What is a qualified donation?
A qualified donation is any monetary (check, credit card, payroll deduction, electronic funds transfer) and marketable securities (stocks and mutual funds) donation.
- $500 is the minimum donation eligible for tax credits in a taxable year.
- $125,000 is the maximum amount of donations eligible for tax credits in a taxable year.
- There is no minimum or maximum donation limitation for businesses.
What is the tax credit approval process?
The tax credit approval process includes the following 5 steps (please review the program guidelines and instructional presentation for more details):
- The individual or business donor must request a specific tax credit amount using the Preauthorization Request Form. Scholarship foundations that submit the preauthorization request on behalf of the donor must use the secure Web-based system. Tax credits are preauthorized to donors on a first come, first served basis.
- Once the preauthorization request is approved by VDOE, the donor will receive an Approval Letter with a unique six letter code in the mail. The donor has 180 calendar days from the date of the Approval Letter to make a qualified donation to an approved scholarship foundation (For a list of approved scholarship foundations, click on the link Approved Scholarship Foundations on the main EISTCP webpage).
- The donor makes a qualified monetary or marketable securities donation to an approved scholarship foundation. The Approval Letter issued to the donor by VDOE must be completed, signed and accompany the monetary or marketable securities donation to the scholarship foundation. (Donations made prior to the date of the Approval Letter will not be approved for tax credits.)
**Please note that a donor is prohibited from identifying a specific school from being the recipient of a tax credit-derived donation. This policy prevents scholarship foundations from violating the statutory requirement that a scholarship must be portable.
Scholarship Foundation Responsibility
- Scholarship foundations that receive qualified donations from donors preauthorized for tax credits must submit the completed Approval Letter and proof of the donation within 40 calendar days from the date of the donation using the VDOE’s secure Web-based system. For donations of marketable securities, a scholarship foundation must sell and convert such securities into cash no more than 21 calendar days after receipt of the donation. (VDOE gives the scholarship foundation access to the secure database after it is approved as a scholarship foundation.)
- After VDOE reviews the donation to ensure that it is a qualified donation, made within 180 calendar days from the date of the Approval Letter, and received from the foundation within 40 calendar days form the date of the donation, VDOE will approve the donation for a tax credit within 30 calendar days and issue the donor a tax credit certificate.
**Please be aware that any Approval Letter not acted upon by the donor within 180 calendar days of issuance, or made in a timely manner but not submitted by the scholarship foundation to VDOE within 40 calendar days, will become void and not eligible for the tax credit.**