Charitable giving incentives under the CARES Act

Man and woman, senior married couple using digital tablet at home together.

by Kaye Ridolfi, Senior Vice President, Advancement, Cleveland Foundation

On March 27, the $2 trillion COVID-19 relief package titled the CARES Act, or The Coronavirus Aid, Relief, and Economic Security Act, became law. The legislation was designed to aid individuals, large corporations, small businesses and public health organizations as well as support state and local governments and educational institutions while strengthening the social safety net. There are also several important provisions that encourage charitable giving during the COVID-19 crisis.

First among these provisions, itemizers can now claim 100% of their adjusted gross income for cash gifts to public charities in the 2020 tax year. The prior cap was 60%, so this is certainly a major incentive for many high-net-worth individuals looking to offset their taxes due with a sizable charitable giving strategy. It’s important to note that this increase does not apply to gifts to donor advised funds or supporting organizations. That said, cash contributions to organizational funds, field of interest funds or the Greater Cleveland COVID-19 Rapid Response Fund would meet the requirement. (Please contact our team if you have any questions before giving.)

For corporations, the charitable deduction cap was increased from 10% to 25% for cash gifts to public charities and from 15% to 25% for food inventory donations. For corporations, excess cash giving may be carried forward for five years.

Finally, individual filers and married couples filing jointly can now claim $300 “above the line” in cash charitable contributions without itemizing on a special schedule. This provision is in addition to claiming the standard deduction and applies to personal filings next year. As before, the deduction does not apply to contributions to donor advised funds or supporting organizations, but the Cleveland Foundation does steward several fund types that qualify.

For information on resources available to nonprofits under the CARES Act, please check out our post from April 3, 2020: The CARES Act offers relief for nonprofits during this unprecedented time.

Kaye Ridolfi, Senior Vice President, Advancement

Please contact your tax advisor or our Advancement hotline at 877-554-5054 and for information on charitable giving during this unprecedented time. We stand ready to serve you.