This year’s COVID-19 pandemic and the resulting economic losses have made for a very challenging time for many people. Many sectors of the business and nonprofit world were negatively affected by pandemic-related restrictions and changes in consumer spending.
Despite this, and perhaps in response to the heightened need, charitable giving was up 7.5% in the first half of 2020 compared to the same period in 2019, according to an October 6 article by the Chronicle of Philanthropy‘s Eden Stiffman.
That increase comes notwithstanding a dismal first quarter that saw giving down 6% from year-ago levels. The 7.5% surge in giving also comes as many social services nonprofits have seen increased demand for services.
As year end approaches, nonprofits need strong support to continue their missions.
The CARES Act, passed in March, included several one-time giving opportunities to encourage Americans to give generously this year.
CARES Act Charitable Giving Provisions
- A $300 “universal” charitable deduction. All taxpayers, even those who do not itemize deductions, can deduct up to $300 of cash contributions made to most public charities. This opens the door for everyone to get credit for at least a portion of their charitable giving. Notably, contributions to donor advised funds (DAFs) do not qualify.
- 100% of adjusted gross income deductible (AGI). Normally you can deduct up to 60% of AGI in charitable gifts, but for 2020 only individuals can deduct up to 100% of AGI. I can’t see this provision applying to many. Some, however, will be able to take advantage of the opportunity and increase their giving.
- Corporate giving deduction increased from 10% to 25%. For 2020 only, corporations can deduct up to 25% of taxable income for charitable contributions to a public charity (though not contributions to a DAF). Corporations can also deduct up to 25% of taxable income for contributions of food inventory (up from 15%).
- Under the new law, there is no required minimum distribution for IRAs this year. However, if you’re in a position to do so, you can still make a qualified charitable distribution (QCD) from an IRA to a charity. To keep the money from being included in your AGI, you must transfer the distribution directly to the charity (again, not into a DAF).
A generous heart doesn’t require favorable tax laws to act. However, we can wisely use every opportunity the law provides to maximize our resources in giving.
Take note of the opportunities and make plans to give generously this year from all that you’ve been given.
Photo by Harli Marten on Unsplash
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Published October 7, 2020
Topics: Giving Strategies