• You can direct all or some of your PA state income tax liability to MPFS. Our school will, in turn, use your gift to provide critical financial aid to students in need.
• You will receive a tax credit of 90% of your contribution to The Collaborative. In addition, you may be able to claim a federal income tax deduction. Together, these benefits make a significant gift very inexpensive to make.

• Individuals become members of The Collaborative.
• You agree to contribute to The Collaborative for two consecutive years roughly equal to your anticipated state annual income taxes plus 10%.
• You receive a tax credit each year for 90% of your contribution (roughly the amount of your anticipated taxes). A $10,000 gift costs the donor less than $1,000 out-of-pocket. A $3,000 gift (the minimum required) costs less than $300 out-of-pocket.
• On the receiving end, The Collaborative gifts your funds to the Friends Council on Education, which distributes them to MPFS and other member schools. The Collaborative then sends you a tax form allocating the state income tax credits to you.
• You will receive a K-1 in March of the year following your contribution. Use Schedule K-1 to report credits, deductions, etc., on your Form 1040 or 1040-SR. Keep it for your records. Only file it with your tax return if instructed by your tax professional.

Great news! If your business has PA state tax liability over $3000, tax credits are available to your business as well with none of the hassle to apply through the state. Consider participating through TFC and save applying to the state for credits. We've got that part covered and tax credits available for you to use. 

or

Participate with TFC for additional PA tax liability not covered by your EITC - OSTC application to the state. More tax credits for your business!

Taxes eligible for EITC, OSTC and PKTC credits include:

• Personal PA income tax of employees, shareholders, or partners of corporations or partnerships
• Pennsylvania Corporate Net Income Tax
• Capital stock / franchise tax
• Bank and trust company shares tax
• Title insurance companies shares tax
• Insurance premiums tax
• Mutual thrift institutions tax 
• Malt Beverage Tax
• Surplus Lines Tax

You may qualify if you have a PA Tax Liability of at least $3,000 annually, with at least one spouse either employed or holding an ownership interest in a Pennsylvania for-profit business.

The SPE concept evolved notably with Pennsylvania Act 194 of 2014, broadening benefits beyond traditional business owners. This pivotal legislation, enacted in October 2014, redefined "business firm" and "pass-through entity," setting the stage for the SPE framework.

Essentially, an SPE functions as a conduit for individuals outside the traditional realm of business ownership to access benefits such as the Educational Improvement Tax Credit (EITC). By establishing Limited Liability Companies (LLCs) structured as SPEs, individuals can pool their contributions, thereby collectively applying for EITC benefits. Pennsylvania duly recognizes the SPE as a legitimate business entity eligible for participation in the program.

Here's the process: Individuals contribute to the SPE, which applies for EITC credits on their behalf, treating the contributions as capital injections. The SPE aggregates and distributes funds to qualifying organizations upon receiving state credits. At year-end, credits are allocated back to participants, granting them traditional business owner benefits.

This innovative approach has gained traction among stakeholders, channeling funds directly towards their causes. The Friends Collaborative (TFC) is a prime example of facilitating SPE participation. Prospective members are required to have Pennsylvania tax liability with at least one spouse either employed or holding an ownership interest in a PA for-profit business, meet a $3,000 minimum contribution, and formalize their commitment through a Joinder agreement. Upon receiving credits, participants remit funds to their designated LLC through TFC, which channels contributions to the Friends Council on Education for distribution to member schools. Crucially, TFC ensures that 100% of participant contributions directly benefit designated schools, highlighting the transparent and impactful nature of the SPE framework.

• When credits are available, participation in this program is on a first come first serve basis. If no credits are immediately available you can join a waitlist to queue up for the next round. Contact Cynthia McGoff, Assistant Head of School for Development, at 610-565-1960, ext. 106, to discuss your involvement in an upcoming round of funding or select a date to meet virtually below. Please note, TFC seeks participants with a tax liability of $3,000 or more who are willing to participate for at least two years. 
• For More Information: Please refer to TFC website at thefriendscollaborative.org
• Contact the Executive Director of The Friends Collaborative: Alexandria Hansen, alex@thefriendscollaborative.org

What's the size of the scholarship gift I can make with PA Educational Improvement Tax Credits (EITC) as an Individual? Use this calculator. 

What size scholarship gift can my business make with PA Educational Improvement Tax Credits (EITC)? Use this business calculator.

These tools are for informational purposes only and do not constitute tax or legal advice. Please consult your tax advisor for your specific tax situation.

Step by Step instructions on participating
All participation forms are online. Click here for an easy guide.