Congress passed the CARES Act this summer as a response to the COVID-19 outbreak, and the new tax rules could boost end of year church and online giving. The act provides relief in a variety of ways, including the Payroll Protection Program. It also incentivizes givers to help nonprofits and churches keep their missions moving forward. In this post, we’ll explain what CARES Act is, how your organization may benefit, and four ways to encourage donors to take advantage of the new law!
What is the CARES Act?
According to the US Treasury Department’s notice on the CARES Act:
Congress passed and President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27th, 2020. “This over $2 trillion economic relief package delivers on the Trump Administration’s commitment to protecting the American people from the public health and economic impacts of COVID-19.
The CARES Act provides fast and direct economic assistance for American workers, families, and small businesses, and preserve jobs for our American industries.”
The CARES Act also includes temporary changes to the tax laws regarding charitable donations, in an effort to save nonprofit and religious sector jobs.
Normally, individuals can deduct up to 60 percent of their Annual Gross Income (AGI) if they have itemized records of their giving. Also, corporations can deduct up to 10 percent of their taxable income. Without itemized deductions, an individual or married couple can take the standard deduction.
What is a standard deduction?
According to Bankrate, the standard deduction is a dollar amount that reduces the bottom-line income on which you are taxed. The amount of your standard deduction depends on your filing status, age, whether you are disabled or can be claimed as a dependent. Also, the standard deduction only can be claimed if you do not itemize deductions on your return. Read more about standard deduction here.
What are the Two Changes to Taxable Donations Laws?
Increase of Standard Deduction
The CARES Act re-incentivizes charitable giving by creating a $300 above the line deduction for qualified charitable contributions. All taxpayers that take the standard deduction on their 2020 return qualify for this deduction. Under the CARES Act, individual taxpayers can take a deduction of up to $300 for donations made in 2020 when they file their tax return, even if they don’t itemize on their income tax return.
Increase of Percentage for Itemized Deductions
Again, the income tax charitable deduction for cash gifts is limited to 60 percent of your income. This 100 percent limit allows donors to reduce their 2020 federal income tax to zero. Your charitable deductions in 2020 cannot exceed 100 percent of your income, but you may be able to carry unused charitable deductions forward to future years.
How can the CARES Act benefit your church or charity?
This is the important part! Let your tithers and donors know that their donations to their churches or favorite charities can actually help them save money. Instead of paying more taxes on their income, they can use that money to give to your organization instead! How’s that for a benefit? The problem is that not many people know about this incentive.
What Should Churches or Nonprofits Do To Benefit From the CARES Act?
Your next steps can really make a difference for year-end giving totals. You can increase your donations by sharing these changes in tax laws with the following ideas:
Run a $300 giving campaign
Figure out how much $300 will do for your mission. Will it buy 30 backpacks for school-aged children? With $300 from 30 people, can your church cover Christmas meals at the homeless shelter? Whatever it is, tell your givers how their donations will impact their community. Then, explain how it benefits them to give up to $300 in donations for 2020 if they haven’t yet!
Email Your List
Add information about the CARES Act deduction to your weekly or monthly newsletter to inform more people about the incentive to give. If every nonprofit or faith organization communicates these tax law changes to their email subscribers, it benefits the entire community.
Share on Social Media
Most people won’t take action without a clear call to action. Congress approved these tax law changes for this year only, so a sense of urgency already exists. Share your online and social giving links to make it easy for donors to act. Givelify provides receipts and reporting tools. So, givers can easily keep track of their donations if they want to itemize their charitable contributions.
Find a Big Donor to Match any $300 Contribution
For those who do itemize their deductions, the new law allows for cash contributions to qualified charities or churches to be deducted up to 100 percent of your adjusted gross income for the 2020 calendar year. Big donors can benefit big time. So, why not ask your biggest givers to encourage others to take advantage of the new laws too? Asking big donors to match any $300 donation will double your donations in a snap! Also, make sure you tell potential givers about the match opportunity, so they know their $300 is really worth $600!
2020 is the Year to Give
Not a lot of great things have happened in 2020. It’s been a hard one for everyone, particularly churches and nonprofits. “Our nation’s charities are struggling to help those suffering from COVID-19, and many deserving organizations can use all the help they can get,” said IRS Commissioner Chuck Rettig. “The IRS reminds people there’s a new provision that allows for up to $300 in cash donations to qualifying organizations to be deducted from income. We encourage people to explore this option to help deserving tax-exempt organizations – and the people and causes they serve.”
Let’s end 2020 on a good note! Let’s share our blessings, gratitude, and gifts with those that need them the most.
Sign up your organization now with Givelify now and take advantage of all the CARES Act has to offer. Giving just got better. And you can take that to the bank (or the IRS, in this instance!)