Tuesday, Feb 22 2011 5:12PM
California is offering a tax break for state insurance companies that invest in Community Development Financial Institutions to benefit rural and underserved communities.
California's Department of Insurance announced it will offer insurance companies more than $4.5 million in tax cuts in exchange for investing in the state's rural and underserved communities.
Available through California's Organized Investment Network, the tax credits are available to support $23.7 million in community development investments. Investors would allocate at least $50,000 to a Community Development Financial Institution (CDFI) for 60 months at no interest in exchange for a 20 percent state tax credit and a 4.5 percent annual percentage rate of return. The CDFI will then distribute loans to various small businesses and nonprofit organizations in areas in need of rural community development.
"This is a critical program that benefits some of California’s most underserved communities, and so I want to encourage insurance companies to give back by investing in these communities," said state Insurance Commissioner Dave Jones.
In the past, CDFIs, such as Rural Community Assistance Corporation, have invested in projects to help improve water systems services in rural communities, provide affordable housing assistance, give micro-loans for small business owners and create community facilities such as community hospitals, women’s shelters, fire stations and community centers.
Various organizations in the Golden State are attempting to invest in communities to improve the state's economy. California's director of the U.S. Department of Agriculture's Rural Development Department has been touring outlying areas of the state to discuss how local governments and small business owners can stimulate job growth and find capital to invest in new projects.