To our committed supporters:
The COVID-19 pandemic has had a detrimental impact on our economy with the charitable sector being especially hard hit this year. With fundraising reserves depleting and financial support in flux, we are ever more reliant on the continued support of our committed donors.
Many are unaware that the Coronavirus Aid, Relief, and Economic Security (CARES) Act has some lesser known provisions which incentivize charitable giving in 2020. These provisions are only eligible for cash donations (not in-kind) made this year prior to December 31, 2020.
With year-end giving upon us, I wanted to offer a brief refresher on different ways to give and to make sure our donors are informed on how your generosity can benefit you!
- Cash donations for those who take a standard deduction – For tax year 2020, the CARES Act has made universal deductions available up to $300 for individuals and $600 for joint filers who do not itemize deductions. Any amount that exceeds $300 for individuals or $600 for joint filers cannot be carried forward to future tax years or claimed as an itemized deduction.
- Cash donations for those who itemize – For individuals that itemize deductions on their tax returns, a deduction up to 100% of adjusted gross income can be deducted. Any amount exceeding adjusted gross income may be eligible to be carried forward to a future tax year. Prior to the CARES Act charitable deductions were limited to 60% of adjusted gross income.
- Corporate Entities – Corporations may deduct charitable contributions up to 25% of taxable income, as opposed to 10% prior to the CARES Act.
- IRAs – If you’ve reached 70 ½before January 1, 2020, you can make a Qualified Charitable Distribution (QCD) of up to $100,000 per individual tax free from your IRA. If you’re over 72, Required Minimum Distributions are waived in 2020 but you can still make a QCD of up to $100,000.
- Gifts of stock– 2020 market gains have left some with appreciated stock carrying substantial capital gains tax. You can donate shares and potentially get a tax deduction for the full market value of the stock on the date of the gift.
- Other ways to maximize tax benefits – Repurposing a life insurance policy may also provide enhanced benefits for donors. The former is a way to make a donation to a donor advised fund to meet the standard deduction in a single year while using the fund to continue to support your favorite charities annually.
Please note that these tax incentives only apply to contributions made to qualified charitable organizations. The Near East Foundation is a qualified charitable organization (EIN 13-1624114).
I hope that you find these tips helpful as you plan your year-end giving. While this is intended to provide a useful overview of beneficial tax updates under the CARES Act as it relates to charitable giving, please note that each taxpayer’s situation is unique and should be carefully reviewed with a professional advisor. The above information is not intended to provide tax advice.
NEF Senior Vice President and Chief Financial Officer
For questions or further guidance contact:
John Ashby, SVP and CFO, firstname.lastname@example.org
Andrea Crowley, Director of Partnerships and Philanthropy, email@example.com