Your Tax Return Fundraises For These Nonprofits

Determining which nonprofits will be granted the privilege of collecting contributions through the Michigan income tax return and its checkoff options is up to the Legislature. The number of nonprofits that can take advantage of this high-visibility placement is limited by law, and right now there are six candidates for two openings. The checkoff boxes allow taxpayers to contribute tax refund money to a designated grant program or organization.

The openings were created when two checkoffs failed to yield the $50,000 threshold last tax season. (One was for the Girl Scouts of Michigan; a second one covers expenses related to Amber Alerts.) By law, only 10 at a time are allowed, and those that collect less than $50,000 two years in a row get dropped.

“We talked about just getting rid of it [the checkoff list] altogether,” said Rep. Jeff Farrington, R-Utica, who sponsored the bill that eventually became the current law governing the practice, Public Act 151 of 2012. “My concern was that, if we were going to keep doing it, there ought to be some kind of process involved. In the end, we decided to keep the list and adopt new guidelines for how it would operate.”

“The governor said he was willing to allow up to ten charities on the list and so that’s the limit we put in the bill,” Farrington continued. “Under the new law, charities don’t get added to the list arbitrarily. There are requirements and if they don’t meet those requirements they won’t be on the list.”

Leon Drolet, chair of the Michigan Taxpayers Alliance, said his opinion on the checkoff list has changed over the years. Drolet was a state representative from 2001 to 2006.

“When I was in the Legislature my position was that any taxpayer dollar that could be sent somewhere other than to government coffers was a plus. So I wasn’t necessarily opposed to having the list.” Drolet said. “But since then I’ve sort of come over to the view, expressed by the Mackinac Center and others, that government shouldn’t be in the business of creating advantages limited to just certain entities — and that includes charities.”

“It sounds like the new law, to an extent, mitigates some of my objections to the checkoff list,” Drolet continued. “It seems to be an improvement over the way things were done when I was in the legislature. But you can bet that politics and lobbying will still play a major role in which charities get placed on the list. It’s too bad but it really seems like we’re increasingly becoming a society in which less energy and effort is directed toward making sure we’re providing value while more and more is directed toward lobbying.”

One possible change would be to put a blank box on the tax form and allow taxpayers to write in a charity of their choice. But Farrington dismissed that possibility as unworkable.

“That would create a lot of administration problems for the Department of Treasury,” he said. “There are literally thousands of charities; for instance, there are numerous ones just within the Girls Scouts organization. That’s why one of our requirements for the charities on the list is that they have only one specified address for Treasury to use.”

Drolet said he hasn’t given much thought to a blank box approach but he believes there could be intriguing ways to expand upon on the checkoff list.

“Whether it would be practical or not, I think we can be pretty sure that nobody’s lobbying for the blank box,” Drolet said. “But if we’re going to have a checkoff list, how about one where taxpayers could checkoff the government programs they want their tax dollars to go toward? That would be the kind of checkoff list I’d be interested in seeing.”

There are four charities and four government grant programs that will stay for now on the checkoff list. The charities are United Way of Michigan, the Alzheimer's Association of Michigan, ALS of Michigan (Lou Gehrig's disease), and an organization that promotes Special Olympics programs. The four state grant programs are ones that help needy veterans and their families, fund child abuse prevention activities, provide college tuition subsidies for veterans and their children, and promote dog and cat sterilization and adoption.

Lawmakers have to decide by mid-September which two additional charities or grant program checkoffs should be on next year’s tax forms. At this point, six possible replacements are represented in separate bills currently before the Legislature: American Red Cross of Michigan, the Boy Scouts of Michigan, a foundation that supports education opportunities for foster children, Junior Achievement, a prostate cancer screening and awareness group, and the Lions Clubs.