Use the CARES Act for Year-End Fundraising

When the government passed the $2.2 trillion stimulus plan known as the CARES Act—the Coronavirus Aid, Relief, and Economic Security Act—most of the attention went to programs like the Paycheck Protection Program (PPP). Less well-known and understood are the charitable giving incentives included in the CARES Act, which expand deductions for both individuals and corporations. 

 

The end of the year is the perfect time to share information about these new incentives. You may even want to create a fundraising campaign that encourages potential donors to take advantage of individual and corporate deductions that are only available for donations made during 2020.

 

Temporary universal charitable deduction

For people who don’t itemize their deductions, the CARES Act offers a new, one-time deduction of up to $300 for cash gifts made to charitable organizations in calendar year 2020. The provision does not cover other types of gifts or contributions made to donor-advised funds or private foundations—but it is a great way to incentivize donors to contribute end-of-year cash gifts.

 

Suspended AGI limitation

For individual taxpayers who do itemize deductions, the CARES Act temporarily suspends the deduction limit for charitable contributions that are made in 2020. In prior years, individuals could only deduct up to 60 percent of their adjusted gross income (AGI). In 2020, individuals can donate as much cash as they like and deduct the full amount without regard to AGI. 

 

Increase in corporate deductions  

Corporations can normally deduct only up to 10 percent of taxable income for cash contributions. But under the CARES Act, that cap has been raised to 25 percent of taxable income. Contributions must be made to a public charity, as contributions to a supporting organization or donor-advised fund don’t qualify for the increased limits. Corporations can also deduct up to 25 percent of taxable income for food donations in 2020, up from 15 percent in prior years.

 

All of these charitable giving incentives create an exciting year-end fundraising opportunity for nonprofits to drive additional donations at the end of an exceptionally challenging year.

 

Get the support you need

Insero & Co. is a public accounting firm with decades of experience working with nonprofits of all sizes. Our experts are available to provide consulting, automation, and other remote services to help you sustain your mission through 2020 and beyond.