The CARES Act - Motivating Necessary Philanthropy
In our discussions with neighbors, donors and other frontline nonprofits that are delivering services in response to the COVID-19 crisis, we’ve been asked to highlight provisions of the CARES (Coronavirus Aid, Relief, and Economic Security) Act that can streamline philanthropy in this crisis.
Our Special and Urgent Needs (SUN) Fund, which has quickly released grants totaling over $200,000 to provide vital support to children, seniors and the unemployed in the Adirondack region, has sparked numerous conversations with our community friends and nonprofit colleagues who want to arm the fight against COVID-19 with as much philanthropy as possible.
FAQ’s regarding Philanthropic Opportunities vis the CARES Act
What new charitable deductions does the CARES Act offer taxpayers now?
- To stimulate charitable giving, The CARES Act offers to all taxpayers an outright charitable deduction of $300 for cash gifts to public charities, regardless of whether or not you itemize.
- The CARES Act is also offering the pivotal opportunity for people to get a 100% deduction against their Adjusted Gross Income (previously 60%) for gifts to charity. This change paves the way for transformative philanthropy. A person with a $500,000 income can fully deduct a $500,000 cash donation to a qualified public charity, carrying over gift amounts beyond income for the next five years. Gifts to Donor Advised Funds don’t qualify for this new deduction, but Donor Advised Funds have been critical vehicles this past month in fortifying the Special and Urgent Needs Fund and Generous Acts.
- Corporations can now deduct charitable contributions against 25% of their income under the CARES Act, a boost from 10% for cash or 15% for food gifts. Corporate gift amounts over the 25% threshold can be carried over the next five years.
What kind of immediate relief is the CARES Act offering?
- The CARES Act is delivering crucial support to middle and low-income families in direct maximum payments of $1,200 per adult, which are gradually reduced until the benefit cap of a $99,000 income for single filers, $198,0000 for those filing jointly. We’ve had multiple discussions with donors who are urging those in the position to do so to use this new income to give to the SUN Fund and help critical frontline charities.
How Does the CARES Act affect retirement plans?
- Those over 70 1/2 can continue to make tax-free Qualified Charitable Distributions from their IRAs - though new CARES Act provisions mean these QCD’s don’t offset Required Minimum Distributions, as those have now been waived for 2020 for IRAs, 401(k)s, 403(b)s, etc. The benefits of this RMD hiatus, though, are that seniors are relieved of possibly burdensome taxable income, and investments can sit tight to recover in the next two years.
Federal and State efforts won’t cover all of the aid necessary in this crisis. Philanthropy is always needed to fill the gap. Please consider a gift today, given the particular boosts the CARES Act is giving us.