White House Explains Smaller Nonprofit Tax Credits in Jobs Bill

The White House says that President Obama’s jobs bill would allow nonprofits to get several tax credits designed to encourage employers to hire veterans and the long-term unemployed.

However, when nonprofit experts examined the legislation’s fine print, they discovered that the dollar amounts available to tax-exempt organizations are about two-thirds of those available to other employers.

Independent Sector, a coalition of charities and foundations, said it would push to make the “full value” of the credits available to nonprofits.

In a new fact sheet about how the jobs bill affects nonprofits, the White House says the figure for nonprofits was adjusted to reflect the difference in tax liabilities between the two types of employers. Nonprofits, it says, do not pay income taxes or get deductions for the salaries of employees who would be generating the tax credits.

“When these factors are considered, the value to a nonprofit is similar to the value claimed by a for-profit firm,” it says.

Businesses, which are subject to the official corporate income-tax rate of 35 percent, would get the credit on income taxes. Nonprofits would apply the credit to payroll taxes.

The jobs bill proposes the following credits for tax-exempt organizations:

• Up $2,600 for hiring workers who have been job-hunting for more than six months (compared with $4,000 available to businesses).

• Up to $1,560 for hiring veterans who have been unemployed at least four weeks (compared with $2,400); up to $3,640 for veterans who have been without work for at least six months (compared with $5,600); and up to $6,240 for veterans with service-connected disabilities who have been jobless for at least six months (compared with $9,600).

The administration’s fact sheet says nonprofits would also benefit from several other provisions in the jobs bill designed to make it easier to hire people—including the “Bridge to Work” program, which allows employers to take on workers temporarily without pay in exchange for training them while they get unemployment compensation.