Special Update: CARES Act Tax Incentives Extended—With a Small Boost

Today we welcome back a special guest: Stelter’s Senior Gift Planning Consultant, Lynn M. Gaumer, J.D. In her role, Lynn keeps a close watch over tax legislation, research and trends that could affect your planned giving program.

The nonprofit community has been given a year-end gift: A couple of key provisions of the CARES Act were just extended into the new year (and, in one case, increased). Let’s take a look at what the new stimulus package means for the nonprofit community and turn that calendar page to 2021.

Tax Incentives for People to Give to Charity

1. An expansion of the universal charitable deduction for cash gifts

The universal charitable deduction has not only been extended but given a well-deserved upgrade. The new deduction is $300 for single filers and $600 for married couples filing jointly. This is available to taxpayers who take the standard deduction. This tax incentive is available for cash gifts to qualified charities (but not to supporting organizations or donor advised funds).

2. An extension of the cap on deductions for cash contributions

Contributions to public charities are generally limited to a percentage of a taxpayer’s adjusted gross income (AGI). The CARES Act lifted the cap on annual contributions for those who itemize, increasing it from 60% to 100% of AGI for 2020 (and now for 2021). Any excess contributions available can be carried over to the next five years. For corporations, the law raised the annual limit from 10% to 25% of taxable income.

Paycheck Protection Program (PPP) Loans

The new law expands the Paycheck Protection Program. These loans may be forgivable if certain criteria are met. It gives those who have not yet applied for forgiveness the opportunity to spend proceeds on four new types of expenses. Special rules apply for those who have already borrowed and used their original PPP proceeds.

Start Spreading the Word in 2021. Here Are 3 Ideas:

1. Change Your Email Signature Line

Just above your name, add a little messaging about these tax incentives, such as “New for 2021: Deduct up to $600 for cash gifts” or “Thinking of making a cash gift this year? Contact me to learn more about the renewed and expanded tax incentives for 2021.”

2. Connect With Your Donors Via a Phone Call.

Let them know they may be able to increase their giving in 2021 (and take a deduction) by taking advantage of the universal deduction.

3. Consider a Mini Campaign on Social Media

Encourage your donors to use their tax-deductible contribution to benefit your organization. Perhaps you can promote it around a certain event, such as an anniversary, National Nonprofit Day (August 17) or another milestone. The impact can be even greater if a donor’s employer matches the gift. Follow up with an impact story or highlight the total giving numbers (both in number of donors and dollar amount) on social media to show how even a small gift can make a big difference.

Want to Learn More About How the Industry Is Responding at This Time?

Join Nathan Stelter as he addresses questions and concerns of fundraisers like you around the country and shares some ideas on how Stelter is tackling them, helping to put you, your organization and your donors in the best position for success. Check out his webinar “Planned Gift Marketing During & After COVID-19: A Chance to Pivot or Truly Change.”