By Beth Krumm, MEd, Senior Consultant
A $2.3 trillion stimulus bill was rolled out last week with the goal of providing financial assistance for individuals and small businesses hit hard by the Covid-19 crisis. By now, you’re likely aware of the provisions included in the CARES Act aimed to help. You might also be trying to figure out how to utilize it for your nonprofit’s benefit. A quick bill recap:
Charitable Contribution Incentive for Individuals
People who do not itemize charitable deductions can deduct up to $300 in cash gifts (no gifts of stock or gifts to donor advised funds allowed). This is considered an “above the line” deduction, meaning it will be subtracted from a person’s gross income, reducing their Adjusted Gross Income (AGI). This is great for donors who make smaller gifts (think annual fund gifts via direct mail or email).
Your major donors can benefit as well. For people who do itemize their charitable deductions, the cap increases from 60% to 100% of a person’s AGI. This means that a donor could effectively eliminate their tax burden for 2020.
Charitable Contribution Incentive for Corporations
The cap on corporate annual charitable giving increases from 10% to 25% of their taxable income. And the cap on corporations who make a gift of food inventory increases from 15% to 25%. All good news for corporate partners who want to further support nonprofits.
Payroll Protection Program for Businesses
Organizations with less than 500 employees can apply for a loan to help retain their employees. The loan amount is tied to the payroll costs of the business and can be used for payroll, insurance premiums, rent, and utilities. If an organization keeps employees through June 30, 2020, they may have the loan forgiven, turning it instead into a grant.
There are other provisions included in the CARES Act, but those three key areas are most applicable to nonprofits. To learn more, visit the U.S. Department of the Treasury. Also, you’ll want to be sure to speak with a finance professional about your specific organization to ensure the CARES Act is helping in the best way possible.
While the CARES Act shows positive intent, it is important to remember that the vast majority of donors do not make gifts to nonprofit organizations to receive a tax benefit. They give because they believe in - and CARE about - your mission. The tax benefits are just another tool to talk with your donors. Yes, you should be adding carefully crafted messages to all your fundraising communications, while remembering that it’s still about the relationship you have with your donors. They CARE!
As always, Let’s Build Hope is here for you. We can help you determine the best tools and strategies to use with your donors, so they know you truly CARE. Reach us at (314) 716-2496 or LetsBuildHope@lbh-stl.com.
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