Passed in March 2020, the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) includes several provisions designed to bolster the United States economy in response to the COVID-19 pandemic.
You may have heard a lot about this legislation and what it means in terms of unemployment and extended health care benefits. What you may not have heard about is what this legislation means for charitable contributions to nonprofit organizations.
There are two parts to the CARES Act surrounding charitable gifts and the tax-deductions:
- Starting in 2020, taxpayers who do not itemize and take the standard deduction, can take an above-the-line deduction up to $300 in the aggregate for cash gifts to a public charity (excluding donor advised funds and supporting organizations).
- For 2020 only, taxpayers who itemize can deduct cash gifts to public charities up to 100% of their adjusted gross income (AGI), a significant increase from the current 60% AGI limitation for such gifts. As before, any excess can be carried forward for 5 years (subject at this point to the lower AGI limitation in those years).
It is important to note that this excludes gifts made through a family foundation or donor advised fund.
For the last several months, nonprofits have been relying even more heavily on contributions to help keep their services available. Free Library programs and resources are critical in supporting Philadelphia’s communities adjust to living through this crisis. The City of Philadelphia provides for the operation of the Free Library’s facilities and infrastructure, but many of the Library’s critical programs and services like educational enrichment programming, workforce development services, digital literacy and access, and mental health support rely on generous contributions to the Free Library of Philadelphia Foundation.
If you’re interested in supporting the Free Library or making an increased contribution, now is the perfect time to do so! If you have a tax advisor, consult with them to learn how this opportunity may complement your philanthropic plans. If you have additional questions about how you can support the Free Library, contact the Free Library of Philadelphia Foundation Development Office at giving @ freelibrary.org.