April 14, 2020
Nonprofit Update: CARES Act Charitable Contribution Changes
Posted by COVID-19 Rapid Response Team
On March 27, the president signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act. The $2 trillion legislative package to combat the coronavirus pandemic brings much needed economic relief to employers, employees and individuals impacted by the COVID-19 virus. This legislation made several changes to charitable contribution limitation rules for individuals and corporations.
It is important to note that donations to the following types of charitable entities are excluded from the changes:
- Supporting organizations
- Donor-advised funds
- Most private foundations (except private operating foundations and a few others)
- Individuals who take the standard deduction on their tax return (non-itemizers) can contribute up to $300 cash to most 501(c)(3) charitable organizations and claim a new “above-the-line” deduction on their 2020 taxes. Previously, there was no charitable contribution tax deduction available for taxpayers who did not itemize deductions.
- Individuals who itemize their deductions can deduct up to 100% of their adjusted gross income (AGI) for cash contributions to most 501(c)(3) organizations for 2020. The deduction was previously capped at 60% of AGI for cash contributions.
- Corporate donors may also make charitable contributions, and in 2020, corporations may increase their corporate tax deduction from 10% to 25% of taxable income.
- Corporations that donate food inventory during 2020 may increase their charitable contribution deduction from 15% to 25% of taxable income.
Eligible nonprofit organizations should act on this opportunity to communicate with their donors. Both new and existing donors may be inspired to support nonprofits through tough financial times, and these tax benefits can help encourage even small donors to give.
We’re Here to Help
These are unprecedented times. And we know you, your families and your organizations need support, now more than ever. Our top priority as your trusted advisor is to ensure we’re helping you through these tough times. Visit COVID-19 Rapid Response Resource Center for our crisis management resources and contact information for our COVID-19 Rapid Response Team Leaders.