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Voluntary Contribution Funds - Frequently Asked Questions

Individual Voluntary Contributions

Voluntary Contribution Fund (VCF) Sponsor Information


Individual Voluntary Contributions

What is a voluntary contribution?

A voluntary contribution is an election made by the taxpayer to designate amounts on his or her tax return to charitable funds.

How can I make a voluntary contribution?

Voluntary contributions may be made on the following returns:

  • 540 2EZ
  • 540A
  • 540
  • 540NR Long or Short Form
  • 541, Schedule C

What amount can I contribute to a VCF?

You can make contributions of $1 or more, in whole dollar amounts.

Is a voluntary contribution irrevocable?

Yes. The voluntary contribution can only be made on the original return. Contributions cannot be made or reversed on an amended return.

Example: John made a voluntary contribution on his current year tax return. On December 30, he changed his mind and tried to request a refund of the contribution he made. Since the tax return had already been filed, John cannot revoke his contribution. Therefore, he will not be entitled to a refund.

Can I deduct my contribution as a charitable deduction?

The voluntary contributions are permitted as charitable contributions (in the year following the contribution) on the Federal Schedule A.

What happens to my contribution if my payments and credits are less than my tax liability?

The individual electing to contribute must use their own funds (payments and credits) in excess of their tax liability. A taxpayer due a refund may elect to direct all or a portion of the refund to a voluntary contribution fund.

If the payments and credits reported on the return do not exceed the tax liability, no designation will be made.

When is my contribution pro-rated?

If the taxpayer designates a contribution to more than one fund and the amount available for the contribution is insufficient, the contribution will be allocated on a pro-rata basis.

What happens if I make no fund designation for my contribution?

If the taxpayer does not designate to a specific fund, the contribution will be transferred to the General Fund.


Voluntary Contribution Fund (VCF) Sponsor Information

How do I add a fund to a tax return?

All funds are legislatively enacted. Contact your local legislative representative for more information. To find your local representative go to Your Legislature Website.

Are there any administrative costs for a VCF?

The State Controllers may be reimbursed a maximum of:

  • Two percent of valid contributions in the first year the fund is on a return, and
  • One percent of valid contributions in each succeeding year the fund is on a return

In addition, the Franchise Tax Board may be reimbursed a maximum of:

  • Three percent of valid contributions in the first year the fund is on a return, and
  • Two percent of valid contributions in each succeeding year the fund is on a return

What is the $250,000 Minimum Contribution threshold?

Some voluntary contribution funds are required to meet a minimum contribution test. If the contributions made do not exceed $250,000 (as adjusted for inflation) in any taxable year, the Fund may be effectively repealed. Go to each individual voluntary contribution's Fund History to see the Fund Status Reports showing the amount contributed to each fund.

Go to Voluntary Contributions - Fund Status Reports to see the amounts contributed to each fund and which funds are required to meet the minimum contribution requirement.

Why does the minimum contribution threshold fluctuate?

Legislative changes to the fund language may cause a recalculation of the minimum contribution threshold amount.

In addition, the Department of Industrial Relations conducts research and publishes information on economic, employment, and work place safety and health statistics. Publications include the Director's General Prevailing Wage Determinations and the California Consumer Price Index. This information is updated every August.

What happens if a VCF does not meet the minimum threshold?

If a voluntary contribution fund does not receive the required dollar amount of contributions the fund is repealed and removed from the tax returns the following year.

Example: A fund did not meet the minimum contribution threshold in 2006. The fund would be removed from the 2006 tax return, which is filed in 2007.

When a fund does not meet its threshold, it becomes inactive until it is repealed by and is removed from statute. It cannot be "reactivated." New legislation would be required to put a fund back on the return that has either failed to meet its threshold, or if repealed by statute.

What is a Sunset/Repeal Date?

A sunset or repeal date is the first day in January following the last year a fund is legislated to appear on a return.

Example:    Final Tax Return        Sunset/Repeal Date
                         2007                    January 1, 2008

What happens when a fund reaches its Sunset Date?

The sunset/repeal date is the date that a voluntary contribution fund "sunsets," or is removed from statute.

How can a Sunset Date be changed?

All funds are legislatively enacted. Contact your local legislative representative for more information. To find your local representative go to Your Legislature Website.