Nebraska Community Foundation Explains How CARES Act Impacts Charitable Giving

The Nebraska Community Foundation (NCF; NebraskaHometown.org) is aware of the impact the CARES Act will have on charitable giving. In response to the COVID-19 pandemic, Congress has passed the $2 trillion-plus CARES Act which does many things, including providing direct cash payments to Americans, pushing back income tax filing and payment deadlines, and encouraging charitable giving. The NCF shared three ways the CARES Act may affect charitable giving:

  1. Above-the-Line Charitable Deduction—To encourage cash gifts to nonprofits, there is $300 above-the-line income tax charitable deduction that is available beginning in 2020 to those who claim the standard deduction. Only about 10% of donors itemize their deductions; for the 90% who take the standard deduction, this may motivate them to make charitable gifts.
  2. 100% Charitable Deduction—For 2020, individual donors may deduct cash gifts to charities up to 100% of their adjusted gross income (AGI). The 100% limit is reduced dollar-for-dollar for each non-cash gift (i.e., highly appreciated stocks or property) and is not available for cash gifts to donor-advised funds. In normal years, donors can carry forward charitable deductions if they go above 60% of their AGI, and that might still be a good idea. The taxpayer must make an election on his/her tax return to take the larger deduction. It is important to seek counsel from a professional advisor.
  3. Temporary waiver of Required Minimum Distributions (RMDs) from retirement plans for 2020—RMDs do not have to be taken for 2020, which may reduce the incentive for donors to make qualified charitable distributions (QCDs). However, donors are still allowed to make QCDs from their IRAs of up to $100,000 beginning at age 70.5.

Nebraska Community Foundation unleashes abundant local assets, inspires charitable giving, and connects ambitious people to build stronger communities and a Greater Nebraska. Learn more at NebraskaHometown.org.