By Kristi Howard-Shultz
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed on March 27, 2020 to help taxpayers, businesses, and nonprofits in the wake of the pandemic and economic downturn. While the provisions of the CARES Act are set to expire at the end of this year, there may still be time to take advantage of the benefits.
The CARES Act could help nonprofits, gift officers, and donors alike. To better understand its impact on philanthropy, I spoke with Dr. Patrick Rooney, executive associate dean for academic programs and professor of economics and philanthropic studies, who explained a bit more about the Act and put it all into context.
- ItemizingThe adjusted gross income (AGI) limit for cash contributions was increased for individual donors. For cash contributions made in 2020, donors can now elect to deduct up to 100 percent of your AGI (increased from 60 percent).
- Not itemizingThe CARES Act allows for an additional “above-the-line” deduction for charitable gifts of up to $300 made in cash. If individuals are not itemizing on their 2020 taxes, they can claim this new deduction.
- DAF giving These new incentives apply only to cash contributions to public charities and do not apply to contributions to supporting organizations or public charities that sponsor donor-advised funds.
- IRA giving The Required Minimum Distribution is waived for IRA and other qualified retirement plan owners for 2020. For donors who still wish to use IRA funds to make a qualified charitable distribution, it is still available up to $100,000 for individuals who are older than 70½.
The AGI limit for cash contributions was also increased for corporate donors. Corporations can now deduct up to 25 percent of taxable income (up from 10 percent).
The CARES Act may be most helpful in terms of making charitable giving more part of our cultural values and tax policy norms. In other words, it introduces the concept to some and keeps the conversation going for others. As gift officers, we can do several things to promote the benefits of the CARES Act and advance the conversation to benefit charitable giving and philanthropy as a whole.
- Include this information everywhere you can—on your landing page, as an insert in your next mailing, in your follow-up email, as a set of talking points to use as you make your year-end calls.
- Keep segmentation in mind. This Act appeals to your donors, in each bucket, in different ways. Tailor your message accordingly.
- In that segmentation strategy, new/never donors may be the lowest hanging fruit. Develop a special campaign to encourage $300 donations. Encourage everyone to take advantage of this one-time universal deduction opportunity, noting that if their employer matches gifts, they could potentially benefit your mission up to $600 – or more.
- Be sure that you are nurturing those donors, at every level, with specialized stewardship, new donor welcome kits, and giving levels that correspond ($300 and $600) to demonstrate not only your outputs but also your outcomes.
Kristi Howard Shultz, founder of Kristi Howard-Shultz Consulting, is a nonprofit executive that leads with head and heart. With 20+ years of experience working for nonprofits including nationally-known, time-tested institutions like The Boy Scouts of America, Big Brothers Big Sisters, and Boys & Girls Clubs, she has worked in nearly every capacity of fundraising throughout her career. She has a proven track record of success in board and fund development, campaign management, and capacity building. She has built a strong reputation within the community and is sought after for her industry expertise and thought leadership. Kristi is a natural relationship builder who loves to put plans into action. Championing “firsts” for organizations is her specialty.