The CARES Act
On March 27, 2020, Congress passed The CARES Act to provide emergency assistance for individuals, families and businesses. Certain provisions were specifically designed to motivate donors to continue to support non-profits:
- For larger individual donors – if donors itemize (or they might), the AGI limit (that was previously adjusted by the 2017 Act to 60%) was increased for CASH donations made in 2020 to 100%.
- For smaller individual donors – if donors do not itemize, they can, nonetheless, claim this “above-the -line” deduction for cash donations made of up to $300.
- For corporate donors – corporate donors can now deduct up to 25% of taxable income (increased from 10%)
- IRA Qualified Charitable Distributions (QCD’s) – there were no significant changes…..BUT….QCD’s allow individuals who are at least 70½ years old to donate up to $100,000 in IRA assets directly to a qualified charity without taking the distribution into taxable income. The CARES Act effectively also affords individuals who are at least 59½ years old tax benefits similar to a QCD, and can be a good strategy for individuals between 59 ½ and 70 ½ who are not dependent on existing retirement funds and who are philanthropic.
Donor Advised Funds (DAF’s)
By definition, donor advised funds act like a charitable savings account that gets you a charitable tax deduction in the year you donate/create your donor advised fund, without choosing a charity right away; you can then remit the money to any qualified charity at any time in the future while the account grows tax-free. A few facts to keep in mind if you are a currently raising funds for your charity:
- Donor advised funds are one of the fastest-growing forms of philanthropy today (per a recent study by the National Philanthropic Trust)
- There are currently about $120 billion in assets in national & community foundation-held donor advised funds.
- Donor advised funds have become more popular since the passing of the Tax Cuts and Jobs Act of 2017, i.e. bunching donations.
- A recent initiative (# Half My DAF https://www.halfmydaf.com/frequently-asked-questions) created a movement with its goal to open up the DAF system and motivate more giving today when the needs of nonprofits are so great.
Cullari Carrico LLC remains committed to assisting our clients, friends and communities during these uncertain times and has a dedicated team in place that can assist with any questions you have related to this or other CARES Act programs. We invite you to contact us if you have questions or concerns.