The outbreak of COVID-19 in the U.S., the state and local governments’ responses to it, and the resulting impact on the general public, have significantly affected nonprofit organizations. Charitable organizations that provide food and other basic necessities and services, including those that support medical and mental health needs of the public, are facing increased demand. Nonprofit arts organizations that rely on admissions and program revenue, such as theaters, dance companies, orchestras, and chorales, are experiencing substantial financial losses. Almost all nonprofits have had to cancel or reimagine fundraising events that typically account for a large portion of annual revenue. Many organizations have had to alter programming and find ways to virtually reach both their supporters and those they serve.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted on March 27, includes new charitable income tax deduction provisions for cash donations made in 2020 to certain public charities and private operating foundations. The provisions include a $300 deduction for non-itemizers and an increase to the annual deduction limit for cash donations by individuals who do itemize from 60% to 100% of the taxpayer’s AGI for 2020. The deduction limit for corporations for such donations is increased from 10% to 25% of taxable income. (Consult your tax advisor to determine if these new provisions can be used to lower your 2020 income tax liability.)
We are now more than two months in to the response to the outbreak in the U.S., and for some organizations the situation is dire. If you have charities that you regularly support at the end of the year, you may want to consider making donations now to help them through this crisis. You may also want to consider making donations equal to the amount you would have spent on spring and summer fundraising events and sponsorships. Many organizations have updated their websites to include their needs associated with COVID-19.