Insights for Non-Profits

With the holidays and gift-giving season right around the corner, now is the time to finalize your organization’s year-end fundraising plan. Kicking off this year’s final push is Giving Tuesday, taking place on November 30th.

While the COVID-19 pandemic has proven to be one of the most challenging times for non-profits, giving did not waiver. On Giving Tuesday 2020, donors gave $2.47 billion to US non-profits, which was up 29% from 2019.

To help keep the momentum of 2020 going, we’re sharing several tax-advantaged opportunities for giving that your organization can market to donors.

1. Charitable Deductions for Non-Itemized Filers

Normally, donors are required to itemize deductions on their tax returns to take advantage of charitable deductions. However, the CARES Act, passed in March of 2020, included a provision for donors that don’t itemize deductions. It allowed an “above-the-line” deduction for charitable gifts made in cash of up to $300. This was extended and expanded into 2021, with the limits now being $300 for single tax filers and $600 for those married filing jointly. This provision expires after December 31, 2021.

2. Deductibility on Cash Donations up to 100% of AGI

Also included in the CARES Act, and extended into 2021, the adjusted gross income limit for charitable donations made in cash is 100% for the remainder of this year (up from 60% normally). Deduction amounts above this limit may be carried forward for up to five tax years. This does not apply for contributions to donor-advised funds or private foundations. This provision expires after December 31, 2021.

3. Qualified Charitable Distributions

After a hiatus in 2020 due to the CARES Act, required minimum distributions (RMDs) are back in 2021. This is an IRS mandate to withdraw from retirement plans when you hit age 72. One way to satisfy the RMD requirement and make a charitable gift is through a qualified charitable distribution (QCD). Donors over age 70 ½ can donate up to $100,000 from their IRAs (not 401ks) and give the money directly to a charity, bypassing the tax liability of an IRA withdrawal and reducing their adjusted gross income.

4. Appreciated Assets

One of the most tax-efficient ways to give is by donating appreciated assets such as stocks, bonds, or other securities. Donors who itemize on their taxes will receive a tax deduction for the value of their gift (limited to 30% of their adjusted gross income), while also avoiding any capital gains embedded in the asset. This might be an attractive tactic for donors with unusually high income or unrealized capital gains this year.

For other strategies your organization may want to consider, check out our Fundraising 101 Guidebook.

The information in this paper is not intended as legal or tax advice. Consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation.