Millions in donations returned to taxpayers

Georgia nonprofits had to return millions of dollars to taxpayers donating to the popular Georgia Tax Credit Scholarship Program, which reached its $50 million cap in 2011 faster than anticipated.

The lure of  receiving a dollar-for-dollar tax credit for contributions made to support scholarships for public school kids seeking a private school education had more people donating faster than ever.  When the $50 million cap on tax credits was reached for the first time, taxpayers who missed the approval window could no longer participate.

State Department of Revenue officials said this week it rejected the applications of 2,764 taxpayers seeking tax credits for $5.7 million they hoped to contribute in 2011.

“It was definitely popular last year,” said Jud Seymour, department spokesman. “We will see what 2012 brings.”

The program has raised an estimated $122 million since it began in 2008. Donations jumped about $9 million in 2011.

The cap was reached in early November, weeks before the Dec. 31 deadline when a large chunk of last minute contributions roll in. As a result, some nonprofit Student Scholarship Organizations raised less money for awards and their partnering schools may have less financial aid available.

Georgia GOAL, the largest nonprofit student scholarship organization, reported that $2 million in contributions earmarked for partnering schools had to be returned. The cut off shut out those who typically write their checks during the peak giving season.  GOAL raised $6 million in December 2010 alone.

“The fact that $2 million was denied, lets you know how much more interest there was in competing for this tax credit,” said Lisa Kelly, president of Georgia GOAL. "It was a disappointment to thousands of taxpayers."

GOAL raised $12.5 million for scholarships in 2011, nearly 9 percent less than the previous year. Students receive an average scholarship award of  about $4,162.

GRACE Scholars, the nonprofit funneling tax credit scholarships to Catholic Schools, also saw fewer dollars this year and had to turn away thousands.

GRACE raised $650,000 less this year. Donors contributed a little more than $3 million, which could mean fewer scholarships available for new students.

“Our policy is when we grant a scholarship, we do it for the full number of years a student is going to be in our schools," said  David Brown, director of GRACE Scholars.  "Anybody that already has a scholarship is going to be OK.’’

Apogee Scholarship Fund, another nonprofit, turned away about $1 million. Officials at Arete Scholars Fund said it had to reject a $1 million corporate gift.

This year, the tax credit scholarship program's new cap is $51.5 million.

Critics say the program gives public money to private schools without any accountability for how funds are spent and whether kids are improving academically.

“This program is entirely unaccountable to taxpayers,” Steve Suitts, vice president of the Southern Education Foundation, a nonpartisan group focused on the education of low-income and minority students, said. “Every dollar that is used by the tax credit program in support of private schools is money that could have gone to public schools or to other public uses.”

Still, George Turner, of Woodstock, who got his 2011 donation returned, intends to take advantage of the program. He mailed his check in January.

" I didn't want to miss the opportunity," he said.

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How the Georgia Tax Credit Scholarship Program works:

Taxpayers donating to the Georgia Tax Credit Scholarship Program receive dollar-for-dollar state tax credits for their gifts, which are first approved by the state Department of Revenue. Maximum contributions are $1,000 for an individual and $2,500 for a couple; corporations can claim up to 75 percent of their tax liability. Donations pass through one of more than 37 nonprofits that partner with private schools across Georgia and award scholarships to public school students seeking financial aid. (At least one nonprofit, awards scholarships to public school families who then shop for private schools.) Under Georgia law, there is no household income limit for the award, however nonprofits say their scholarships largely support low income kids. Donations pass through one of 37 nonprofits that partner with private schools across. http://georgiataxcreditscholarship.org/