For many years, Coloradoans were able to allocate their state income tax refund to any of about 15 or so charities designated by the State of Colorado.
Now, thanks to a 2018 law that is taking effect just in time for the 2020 tax season, Colorado taxpayers can instead donate their state refund, or a portion of it, to any qualified Colorado nonprofit of their choosing.
The new process, an initiative referred to as Refund What Matters, is pretty straightforward, leading local nonprofits to hope that Telluriders are willing this tax season to take a few minutes to donate all or part of their state income tax refund to a cause close to home.
Here’s how it works: when preparing their 2020 individual state income tax return on form DR-0104, taxpayers also include form DR-0104CH. It’s a one-pager that simply requires taxpayers to fill in a single line with the details of the nonprofit they want to support and how much of their refund they want to donate.
State Sen. Chris Hansen (D-Denver) co-sponsored the bipartisan legislation — SB18-141, Income Tax Check-off Nonprofit Donation Fund — and said that the objective was to improve on the old system, with its set list of nonprofits, and create a process that was easier for taxpayers and fairer to all qualified Colorado nonprofits, not just those on the list.
“We ran the bill to make it available to all qualified nonprofits,” Hansen said. “We didn’t want to give preference to any nonprofit over another with this mechanism, so the bill was designed to give equal access. I think the Colorado Nonprofit Association was grateful, they really like the tool that is available, and nonprofits can use it as way to enhance their fundraising activities. And, it makes it super easy on Colorado taxpayers.”
Staff at Telluride’s nonprofits say they hope that the ease of the new system prompts taxpayers to donate all or part of their 2019 refund.
“I think it’s a great way to give money,” One to One Mentoring Executive Director Tara Kelley said. “It’s a different way, and an easy way, to donate to a nonprofit that you want to support.”
Kelley remarked that in her experience many people donate at the end of the year, especially true in Telluride thanks to December’s Telluride Gives. An increase in donations during tax time, she pointed out, has the potential to give nonprofits additional funding at a time of year when they may not normally receive many private donations.
Kelley added that Telluride’s nonprofit community is diverse, providing possible donors with a wide range of causes to support. “We all do something different, which means there is something for everyone to donate to.”
For her part, San Miguel Resource Center Executive Director Riley McIntyre said that SMRC “is very excited that this initiative has started, because it provides an easy opportunity for people to give back to the nonprofits in their community.”
She added, “Since it is the first year that this option exists with the Colorado tax return, we do not anticipate tons of people will take advantage of this way to donate, but with getting the word out, we hope our organization will receive some donations and that donations for all nonprofits in our community will ramp up over the years.”
The Telluride Foundation alerted local nonprofits to Refund What Matters by email earlier this week.
“The income tax refund is a great fundraising opportunity for those more established nonprofits that qualify,” said the Foundation’s vice president of programs, April Montgomery.
In order to qualify, according to the Refund What Matters website, nonprofits must be a 501(c)(3) registered under the Colorado Charitable Solicitations Act for at least five years and in good standing as of Sept. 1, 2019.
“We certainly hope that nonprofits will learn more about what they need to do to qualify and take advantage of this state opportunity to engage more people in their cause,” Montgomery said.
The web site also provides a resources library for nonprofits with information on qualifying and also on effective ways to get the word out to potential donors.
According to McIntyre, SMRC is already on the case.
“We have used some of the graphics from the Refund What Matters website in our newsletter and on social media and we will continue to promote this change throughout tax season,” she said.
For more information, including how to obtain the registration number of any qualified Colorado nonprofit, visit refundwhatmatters.org.