The Georgia Fostering Success Act (O.C.G.A. § 48-7-29.24), also known as the Qualified Foster Child Donation Credit (QFCD), offers an exceptional opportunity for businesses operating in Georgia to make a profound social impact while benefiting from a dollar-for-dollar state income tax credit. This program allows your business to redirect a portion of its Georgia tax liability directly to approved non-profit organizations supporting youth transitioning out of the foster care system.

By participating, your company can demonstrate corporate social responsibility, strengthen the community, and optimize its state tax strategy.

The Fostering Success Act is designed to be straightforward for businesses, offering a direct path to impactful giving.

Unlike a tax deduction, which reduces your taxable income, a tax credit directly reduces the amount of tax your business owes. The Fostering Success Act offers a 100% dollar-for-dollar credit against your Georgia income tax liability.

• Example: If your Georgia corporate income tax liability is $50,000 and your business contributes $5,000 to an approved Qualified Foster Child Support Organization (QFCSO) under this program, your tax bill is directly reduced to $45,000. Your business effectively chooses to allocate $5,000 of its tax payment directly to support foster youth.

The Fostering Success Act is open to various business structures that pay Georgia income tax:

• C Corporations: Can claim the credit directly.
• Pass-Through Entities (S Corporations, LLCs, Partnerships):
  
  • If the entity elects to pay tax at the entity level, it can claim the credit directly.
  • If the entity does NOT elect to pay tax at the entity level, the credit is passed through to the individual owners/shareholders/partners, who then claim the credit on their personal Georgia income tax returns.

The amount your business can contribute and receive a credit for is subject to specific limits, which vary depending on the time of year and your entity type:

• Annual Statewide Cap: The total amount of credits available across all taxpayers (individuals and businesses) in Georgia is $30 million per calendar year. Credits are approved on a first-come, first-served basis.
• Limits for Contributions Made from January 1 to June 30:
  
  • C Corporations, Trusts, or Pass-Through Entities electing to pay tax at entity level: Up to 10% of your Georgia income tax liability.
  • Individual Owners of S-Corps, LLCs, or Partnerships (NOT paying tax at entity level): Up to $5,000. (This credit is claimed on the individual's personal return).

• Limits for Contributions Made from July 1 to December 31:For contributions made during the second half of the year (July 1 to December 31), the limits are adjusted, particularly benefiting individual owners of pass-through entities, provided statewide credits are still available:
  
  • For C Corporations, Trusts, or Pass-Through Entities electing to pay tax at entity level: The limit remains 10% of your Georgia income tax liability.
  • For Individual Owners of S-Corps, LLCs, or Partnerships (NOT paying tax at entity level): If tax credits remain available statewide, the $5,000 individual limit is lifted. This means individual owners can contribute and receive a credit for any amount pre-approved by the state, up to the remaining statewide cap.

The process for businesses to secure this tax credit is similar to that for individuals, requiring pre-approval from the Georgia Department of Revenue:

• Step 1: Request Pre-Approval Online:
  • Your business must electronically submit Form IT-QFCD-TP1 through the Georgia Tax Center (GTC) website (gtc.dor.ga.gov).
  • You will specify the amount your business intends to contribute and designate your chosen Qualified Foster Child Support Organization (QFCSO).
  • The DOR reviews requests on a first-come, first-served basis based on credit availability. Approval typically takes about one week.

• Step 2: Make Your Contribution:
  • Once your pre-approval is granted, your business must make the approved donation directly to the designated QFCSO within 60 days of receiving approval, or by December 31st of the tax year, whichever comes first.

• Step 3: Claim Your Credit:
  • The QFCSO will provide your business with a confirmation letter/form (e.g., Georgia Form IT-QFCD-FUND1 or IT-QFCD-TP2).
  • Attach this confirmation to your Georgia Corporate Income Tax Return (Form 600) or your individual Georgia Income Tax Return (Form 500) if the credit is passed through to owners.

Funds contributed through the Fostering Success Act are used by QFCSOs to provide critical "wraparound services" for eligible youth who have experienced foster care. These services are vital for their successful transition to independence and include:

• Education: Tuition, books, and scholarships for post-secondary education or vocational training.
• Housing: Safe and stable housing solutions, rent, and utility assistance.
• Life Skills: Training in budgeting, job searching, and independent living.
• Mentorship: Connecting youth with supportive adult mentors.
• Basic Needs: Food, transportation, and access to healthcare and mental health services.

• Direct Impact: Your tax dollars directly fund programs that create tangible, positive change in the lives of vulnerable youth in Georgia.
• Corporate Social Responsibility (CSR): Demonstrates your company's commitment to community well-being and social impact, enhancing your brand reputation among customers, employees, and stakeholders.
• Financial Efficiency: A dollar-for-dollar tax credit is the most efficient way to reduce your state tax liability, effectively allowing your business to choose where a portion of its tax payment is invested.
• Employee Engagement: Provides a meaningful cause that your employees can rally behind, fostering a sense of purpose and pride in your company.
• Community Strengthening: By helping youth become independent, educated, and contributing members of society, your business contributes to a stronger workforce and a healthier economic environment in Georgia.

To learn more about how your business can participate or to begin the pre-approval process, we encourage you to visit the Georgia Tax Center website (gtc.dor.ga.gov) or contact your tax advisor. Your contribution can make a lasting difference in the lives of Georgia's foster youth.