It’s the time of year when gift giving is driven more by motivation than obligation. But beyond the holidays, the end of the year is when nonprofit organizations reach out to supporters and donors – current, past and new – to consider a year-end gift, or investment, in agencies doing so much good work in communities large and small.
All the more important this year as nonprofits are attempting to recover from a year rife with fundraising challenges.
A poll conducted earlier this year by the Alliance of Arizona Nonprofits indicated that total loss of revenue of responding nonprofits was nearly $53 million and that by year end the Alliance anticipates a $433 million overall loss. The ongoing pandemic has, of course, cut revenues but also reduced the number of available volunteers and donors for local nonprofits. This is especially problematic when so many nonprofits face increased demands for services.
The Arts and Culture sector, which includes theatres and museums, have had to drastically alter operations, go virtual or shut down due to a lack of funding and ability to remain open safely. “We’re really concerned about those sectors,” CEO Merrifield said. “While they may not be on the frontlines of the pandemic, we want to make sure that they’re around to make Arizona a place we all love.”
So, if this makes giving easier—there’s even something in return as this pandemic continues. Most taxpayers may be able to take a deduction on federal taxes for contributions in 2020. Previously, charitable contributions could only be deducted if taxpayers itemized their deductions.
The Alliance of Arizona Nonprofits emphasizes that the CARES Act actually increases tax-donation benefits for 2020 through two new federal guidelines.
A provision in that act allows any taxpayer to deduct up to the first $300 they donate to nonprofits in 2020. If a taxpayer itemizes, they could potentially deduct more than this amount.
Universal Deduction for Donations Up to $300 via the CARES Act
For the more than 90% of taxpayers who no longer itemize their charitable giving, the CARES Act allows individual taxpayers to deduct donations to nonprofits of up to $300 on their 2020 federal tax return, even if they take the standard deduction. Check with your tax professional to ensure your donation are applicable and what deductions may be for those filing jointly. (The National Council of Nonprofits is currently advocating that Congress raise that dollar amount and extend it to at least 2021, since the COVID-19 recovery won’t be done by December 31)
Raising the Charitable Giving Deduction Cap
For donors who qualify to itemize deductions, and therefore directly write off gifts to nonprofits, the current deduction cap is 60% of adjusted gross income*. Corporations are able to deduct charitable donations up to 10% of taxable income.
*The 60% of AGI limit is for giving to 501(c)(3) public charities. The deductibility of gifts to 501(c)(3) private foundations is capped at 30% and was not included in this legislation.
The CARES Act lifts these caps to 100% for individuals and joint filers, while corporations will see their cap lifted to 25% for 2020.
The State of Arizona provides two separate tax credits for individuals who make contributions to charitable organizations: one for donations to Qualifying Charitable Organizations (QCO) and the second for donations to Qualifying Foster Care Charitable Organizations (QFCO). Individuals making cash donations to these charities may claim these tax credits on their Arizona Personal Income Tax returns.
Arizona Gives Giving eCards: Give a gift that “gives,” and stays local! With Arizona Gives gift eCards, the recipient can support any of the nearly 1,000 501(c)(3) organization featured on AZGives.org. All participating organizations must meet our requirement of providing services for Arizonans too. Giving eCards can be purchased at any dollar amount, for any occasion, and at any time of the year. eCards are available for purchase at: https://www.azgives.org/eCards
About the Alliance of Arizona Nonprofits: The Alliance of Arizona Nonprofits is a statewide trusted resource and advocate for the nonprofit community. The Alliance’s mission is to unite, strengthen and advance Arizona’s nonprofit sector and is comprised of more than 1,000 members – both nonprofits and those in the community who support them – across the state. Since 2004, the organization has been dedicated to furthering the common interests of Arizona’s nonprofit community and envisions an Arizona where all nonprofits are valued, empowered and thriving, with support from grassroots efforts like Arizona Gives Day. For more information, visit www.arizonanonprofits.org, or email firstname.lastname@example.org.