It’s well documented that early-childhood education gives young children a boost in their education and their lives. And the Colorado General Assembly has acknowledged this twice — in 1997 and again in 2018 — with its support of the Child Care Contribution Tax Credit.
By relinquishing tax revenue in order to support child care providers and other services that educate and nurture young children (think after school programs, early-childhood education teacher training efforts, financial assistance for families who need child care, organizations that provide child care information and referrals, etc.), legislators have agreed that early-childhood education is good for Colorado children, families and communities.
“This tax credit builds on the goodwill of people who want to support quality early childhood education in their communities by providing a strong incentive to give more than they otherwise would have,” says Bill Jaeger, vice president of early childhood and policy initiatives for the Colorado Children’s Campaign. “There are benefits to you, the donor, as an individual, but there are also benefits to your community for contributing.”
Here’s how the tax credit works. If an individual taxpayer or business contributes $100 to a qualified child care organization, then that taxpayer receives a $50 credit on his or her tax bill. In other words, the gift ends up costing the taxpayer just $50, but the child care organization receives $100 to put toward salaries, training, supplies or any other priority.
In recent years, this incentive has netted around $50 million for providers around the state. That’s a big number, but it’s not nearly enough to resolve the child care sector’s low wages and high turnover. Tuition payments from parents still account for most of the revenue to preschools and other early-childhood providers, but those payments aren’t enough to sustain organizations that require at least one trained professional for every 5 to 10 children, depending on the children’s ages.
“People go into child care because they want to do the right thing. It’s not a field they go into to make money,” Jaeger explains. “Operators remain viable in many communities because of charitable giving.”
And that’s part of the reason for today’s column: to encourage readers to take advantage of this generous tax incentive and support a qualifying local child care provider or preschool. During the holiday giving season, many locals decide on their charitable giving for the year, and this tax credit is an especially smart tool.
“It’s such a great way to save on your state income taxes and have it go to a worthwhile cause,” says Shirley Ritter, director of Kids First, the city of Aspen’s early-childhood resource center. “And you even get to claim it as a deduction on your federal taxes.”
For example, if you owed $1,000 of income tax to the state of Colorado, you could donate $2,000 to your favorite preschool and erase the debt to the state in the same move.
In general, a gift to any child care program licensed with the state of Colorado qualifies for the Child Care Contribution Tax Credit. This includes a variety of local organizations such as nonprofit preschool programs like the Early Learning Center, Wildwood School, Little Red School House, Growing Years, Blue Lake Preschool and Our School. You can also support programs like Valley Settlement’s El Busesito and Summit 54’s Summer Advantage, as well as school district preschool programs. (A complete list of licensed programs can be found online at Colorado.gov/cdhs/child-care-0.) If you’re not familiar with local child care providers, you can direct your contribution to the Aspen Community Foundation’s Early Childhood Fund, which supports these providers as well as other programs that help families of young children.
The more Coloradans who took advantage of this charitable giving option means more resources for our preschools and child care centers, making it easier for local parents to find available, affordable spaces for their children. So, as you consider your 2019 charitable giving, ask your accountant about the Child Care Contribution Tax Credit.