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Community

Apr
8

Charitable Giving Incentives From The CARES Act

Filed Under: Philanthropy - Posted @ 3:09pm

 

COVID-19 and the necessary public health measures to address it are having a huge impact on the normal operations of nonprofits and community service providers in Pierce County and across the country. From shutting down operations to the sudden surge in need for vulnerable communities, nonprofits were not able to plan for or prepare to address  these rapid changes through their usual services.

Supporting basic needs, like food and shelter, is harder as necessary public health measures lead to business shut-downs, layoffs, reduced volunteer staff, and greater restrictions due to social distancing. Meanwhile, the need for these basic supports is rapidly increasing. Many nonprofit organizations, including arts and culture venues and youth programs, are unable to operate at all under the state’s stay-at-home order.

Donors can make a positive difference at this time by giving generously to the organizations and causes that matter to them. 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into effect on March 27, provides both financial relief for nonprofits and increased charitable giving incentives for individuals and corporations.

Charitable giving incentives include:

  • A one-time, above-the-line deduction for cash charitable contributions of up to $300
    • All taxpayers are eligible to take the deduction, even people who use the standard deduction.
    • The incentive applies to contributions made in 2020 and can be claimed on tax forms next year.
    • The new deduction does not apply to noncash gifts or to gifts contributed to donor advised funds.
  • A temporary increase of income limits for cash contributions by individual and corporate donors
    • Individual taxpayers who itemize their deductions can deduct up to 100% of their adjusted gross income (AGI) in cash contributions (raised from 60%).
    • Corporations can deduct up to 25% of taxable income (from 10%).
  • Waivers for 2020 required minimum distributions (RMDs)
    • Under the new rule, in 2020 you don’t have to take a RMD which could reduce your 2020 tax bill.
    • Even though RMDs are waived, you can still use your IRA to get a tax break on giving to charity.
    • If you normally give to charity, consider a Qualified Charitable Distribution (QCD) from your IRA.  The funds are directly transferred from your IRA to a charity and excluded from income.
    • Only IRA owners and beneficiaries who are age 70 1/2 or older qualify for this.

Donations to the PIERCE COUNTY CONNECTED Fund qualify for the additional deductions. You can also support the Fund with a qualified charitable distribution from your IRA, if you are age 70.5 or older. 

As always, donors should consult with their tax and legal advisors when considering their charitable giving.

GTCF is ready to support donors in fulfilling their philanthropic goals with timely information about local COVID-19 responses and emerging needs. Contact GTCF’s philanthropy team to learn more about making a positive impact right away.

 

Further Reading

CARES Act Sweetens the Pot for Charitable Giving

Giving More Than 60% Of Income To Charity? CARES Act Says Deduct It!

CARES Act Retiree Tax Benefit

Rules Regarding Qualified Charitable Distributions Keep Changing