Are you taking advantage of the CARES Act to maximize year-end giving?
Happy Thanksgiving from Maryland Nonprofits to our member community!
A Maryland Nonprofits member, Vince Connelly of Connelly & Assoc. Fundraising, LLC, authored this draft on making the most out of nonprofit giving using the CARES Act that is believed to have a positive impact for many nonprofits. Please use this language for your network to encourage year-end giving to your organization!
Please review the sample suggested draft text prior to use. This information does not constitute legal or financial advice. Of course, everyone should check with their tax advisor prior to making a gift. Vince recommends that you use the entire paragraph in italics (This information does not constitute legal or financial advice…) at the end of the text below in your communications.
Make the most of your giving to XXXXX using the CARES Act
Here’s what you need to know about the CARES Act, and how you and others may be able to use it to maximize charitable giving to XXXXX when it means the most.
On March 27, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law to help combat the far-reaching impacts of COVID-19. The bill may provide increased tax incentives for charitable giving for some donors, but these benefits apply only in the 2020 tax year, so you must act by December 31.
Please forward this e-mail and share this information with others who might be interested in supporting XXXXX.
First, donors who itemize can deduct cash contributions to XXXXX and most other public charities to offset up to 100% of their income. Ordinarily, this income tax charitable deduction for cash gifts is limited to 60% of income. The 100% limit allows especially generous donors to reduce their 2020 federal income tax to zero. Existing carry-over rules still apply, so those who are even more generous can carry forward unused cash contribution deductions for up to five years. This makes it easier for our most generous supporters to make a gift of a lifetime to XXXXX.
If you don’t itemize, you can take the standard deduction AND reduce your taxable income by up to $300 for gifts of cash to public charities by using an “above the line” adjustment.
Answers to few questions regarding the CARES Act and giving:
Can a donor age 70½ or older still make a gift to XXXXX from an IRA?
Yes. Most required minimum distributions (RMDs) from retirement plans have been eliminated for 2020; however, donors age 70½ or older can still make a qualified charitable distribution (QCD, or IRA charitable rollover) of up to $100,000 to XXXXX from their IRA. While the benefit of using a QCD to satisfy an RMD does not apply for 2020, a QCD remains a great way to make tax advantageous gifts, especially if the donor doesn’t itemize deductions.
Does the CARES Act have any impact on corporate giving?
Yes. The CARES Act Increases the cap on how much corporations may deduct for charitable gifts from 10 percent of taxable income to 25 percent.
Does the CARES Act apply to any gifts other than “cash”?
No. The increased limits are applicable only to cash donations. Contributions of any kind of property, including marketable securities, real assets or otherwise, do not qualify.
Who should XXXXX supporters contact if they have questions?
We advise donors to check with their tax advisor to learn more about how the CARES Act may specifically apply to their tax situation. We would also be happy to have a conversation.
We know that our supporters have important priorities for their families and loved ones, and that their health and financial well-being comes first. We are here to help shape a charitable gift plan that suits a donor’s needs and allows them to keep supporting our important work. Please contact XXXXX at XXXXXXXXXXX.
Thanks again for your generous support of XXXXX.
This information does not constitute legal or financial advice. Consult your financial advisor and obtain professional counsel of an attorney to assist you in making a gift in a way that will benefit the people and organizations you care most about.
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The draft above was authored by a Maryland Nonprofits member and a highly valued individual in our community, Vince Connelly. To Vince and all of our members who regularly share excellent ideas to strengthen the nonprofit sector: thank you! We enjoy being able to share your knowledge and thoughts with the wider community.
There is no need to list Vince in your communications to your network, but we thought that our members might like to have Vince’s contact info.