YEAR-END GIVING AND THE CARES ACT
November 12, 2020 - The leaves are changing and Thanksgiving is fast approaching. In addition to holiday plan-making, November is the time many of us begin to prepare for our end-of-year giving. In fact, about 30% of all giving occurs in December.
But 2020 has been a uniquely difficult year. Understandably, many people are concerned now about their jobs or finances or health. It remains to be seen how this will impact year-end giving and the continued work of nonprofits.
As you consider what you’re able to give at the close of 2020, keep in mind the opportunities the CARES Act affords donors this year.
CHARITABLE GIVING INCENTIVES
Signed on March 27th, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was a $2 trillion relief package to protect individuals and businesses from the economic impact of COVID-19.
In economic downturns, individuals tend to scale back their charitable giving, which can be detrimental to nonprofit organizations that rely on the generosity of their donors. Anticipating this, charitable giving incentives were among the CARES Act’s many provisions. They include the following:
- For those who itemize their deductions, the Cares Act suspended the existing cap on charitable deductions, which was 60% of adjusted gross income, and thus made cash contributions to qualified charities in 2020 fully deductible.
- Charitable contributions in excess of your income can be carried forward for five years, subject to the 60% of Adjusted Gross Income limit in those years.
- If you take the standard deduction, the CARES Act allows for an additional charitable deduction of up to $300 for gifts made in cash.
- Corporations making charitable gifts in cash can now deduct up to 25% of taxable income, up from 10%.
These provisions apply only to charitable giving in 2020, so you’ll want to donate by December 31st to take advantage of them.
Your year-end gifts could help the nonprofits of your choice prepare for what lies ahead in 2021. Now is the time to consult your tax advisor and call our gift planning attorneys to discuss how you can maximize your philanthropic impact in 2020. Though it has been a challenging year, the work of charities is as important now as ever.