Frequently Asked Questions for Donors

You may also be interested in General FAQs and FAQs for Parents.

Who is eligible for the tax credit?
Any individual taxpayer who makes a voluntary contribution to the STO is eligible for the tax credit. Additionally, corporations that file an 1120 or 1120A Iowa tax return can also take advantage of this tax credit program.

How does a tax credit work and how is it different than a tax deduction?
A tax deduction reduces the total income a person’s tax is computed. A tax credit takes the tax credit directly off the amount a person pays in state taxes, also known as their tax liability, thus providing the donor with a
much greater financial return. For example, a person who originally owed $1,500 in state income taxes, donating $2,000 to a School Tuition Organization would receive 75% of the $2,000 and a $1,500 tax credit. The person would then have $0 in Iowa income tax liability. 

What about my federal income tax?
Your STO gift is partially deductible as a charitable contribution on federal tax forms unless utilizing the IRA Rollover program. See below.

What if I don’t itemize my taxes?
Even if you don’t itemize your taxes you can take advantage of the 75% Iowa Income Tax Credit. You would not be able to take a federal deduction, however.

Is there a limit on the size of individual gifts accepted by the Our Faith School Tuition Organization?
The STO can accept any size gift until the total tax credit limit has been reached.

Can the Our Faith School Tuition Organization accept non-cash items?
Yes, non-cash items such as shares of stock, mutual funds, and grain are accepted. If you have questions about what types of gifts can be accepted by the Our Faith STO, please contact Steve Kane at 563-556-2580 ext. 296 or s.kane@dbqarch.org.

When I donate, may I designate a student to receive the tuition grant?
No, a donor may not specify a student or family for the tuition grant but may designate up to 50% of their total gift to any one or more of the schools/systems supported by the Our Faith STO. These eligible schools/systems are listed on the Our Faith STO contribution form. 

May gifts to the Our Faith School Tuition Organization be restricted to an individual school?
Yes. It is possible for a donor to restrict 50% of their gift to one or more school(s) or system(s) supported by the Our Faith STO. However, it is important to note that a restriction only stays with a school/system through one round of tuition grant-awarding (there are usually two rounds), or a school's identified need is met, whichever comes first. We must do this to ensure we comply with the statute (law) that established the STO program in Iowa. Therefore, the STO must raise funds annually and use/distribute all funds in the school year immediately following the year in which the funds were contributed under the law, thus not allowing for the "banking" of funds for individual schools.

How is the state of Iowa fiscally impacted by the STO program?
A 2017 Iowa Department of Revenue study (page 8 of linked document) of the Iowa STO program showed that during the 2016-17 school year, there was an estimated net positive fiscal impact of $12.6 million. This is assuming a 30% substitution rate, which means conservatively if the STO program were to go away,  an estimated 30% of the students receiving tuition grants would assimilate into the public school system. At the time of the study, the cost of these students entering the public system was estimated to be $24.6 million. If you subtract the $12 million the state allocated in tax credits in 2015 (the credits that year funded STO grants during the 2016-17 school year), you arrive at the net fiscal impact of the STO program of $12.6 million for the 2016-17 school year.