The CARES Act provides financial relief for nonprofit organizations and increased charitable giving incentives for individuals and corporations.

COVID-19 and the necessary public health measures to fight it are having a huge impact on the normal operations of nonprofit organizations in Washington, Idaho, and across the country. From shutting down operations to the sudden surge in needs for vulnerable communities, nonprofits were not able to effectively plan for these rapid changes. Supporting basic needs, like food and shelter, has become harder as necessary public health measures lead to business shut-downs, layoffs, reduced volunteer staff, and greater restrictions due to social distancing. Meanwhile, the need for these basic supports is rapidly increasing. Many nonprofits, including arts and culture venues and youth programs, are unable to operate at all under the stay-at-home orders.

Donors can make a positive difference by giving generously to the organizations and causes that matter to them. The CARES Act provides both financial relief for nonprofits and increased charitable giving incentives for individuals and corporations.

Charitable giving incentives include:

* A one-time, above-the-line deduction for cash charitable contributions of up to $300. The incentive applies to contributions made in 2020 and can be claimed on tax forms next year. However, the new deduction does not apply to noncash gifts or to gifts contributed to donor advised funds.

* A temporary increase of income limits for cash contributions by individual and corporate donors. Individual taxpayers who itemize their deductions can deduct up to 100% of their adjusted gross income (AGI) in cash contributions (raised from 60%). In addition, corporations can deduct up to 25% of taxable income (from 10%).

* Waivers for 2020 required minimum distributions (RMDs). Under the new rule, in 2020 you don’t have to take a RMD, which could reduce your 2020 tax bill. Even though RMDs are waived, you can still use your IRA to get a tax break on giving to charity. If you normally give to charity, consider a qualified charitable distribution (QCD) from your IRA. The funds are directly transferred from your IRA to a charity and excluded from income. However, only IRA owners and beneficiaries who are age 70 1/2 or older qualify for this.

If you have questions about how the CARES Act affects nonprofit organizations and your donations to them, give us a call at 253.858.5434.