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Giving Tuesday: Everyone gets a tax break on the first $300 they donate to nonprofits in 2020

If you’re like most people and take the standard deduction, you usually don’t get any credit for your charitable deductions. But this year—thanks to the CARES Act—you will.

Giving Tuesday: Everyone gets a tax break on the first $300 they donate to nonprofits in 2020
[Source Images: Andrey_A/iStock, invincible_bulldog/iStock]
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Like most things during the COVID-19 pandemic, this Giving Tuesday and giving season in general may look a bit different than years past. Millions of Americans are facing food and housing insecurity, and the nonprofits they might turn to are facing financial hardships themselves. More people are in need while fewer people may be in a position to give. But there are new ways to navigate this giving season too, such as the fact that this year, thanks to the CARES Act, anyone can deduct the first $300 they donate.

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In 2017, the Trump administration’s tax reform plan nearly doubled the standard deduction, meaning millions more Americans would take that standard deduction rather than itemize their taxes. “While their tax filing was simpler, they no longer got a deduction for donating,” says Rick Cohen of the National Council for Nonprofits, the largest network of nonprofits in the country. When that change was first announced, public policy experts said it would de-incentivize giving and hurt small charities the most. Even before 2017, the National Council of Nonprofits and others in the philanthropy sector have been pushing for a universal tax deduction so Americans who don’t itemize their taxes can get tax benefits from their charitable donations.

As part of the Coronavirus Aid, Relief, and Economic Security Act, a.k.a. the CARES Act, there is now such a universal deduction. A provision in that act allows any taxpayer to deduct up to the first $300 they donate to nonprofits in 2020. (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.) “For people giving, it gives more flexibility and makes it easier for people to dig a little bit deeper at a time when nonprofits can really use the assistance,” Cohen says. “For nonprofits right now, every dollar counts, whether it’s a food bank that’s got lines of cars miles long dealing with food insecurity or an arts organization that’s been shuttered since March but still has to pay rent and still has employees.”

Nonprofits are in trouble this year, and not only because the needs they’re serving have skyrocketed, Cohen says. They’re the third largest employer in the country, and as in almost every industry, the pandemic and lockdowns have hit its workforce hard. Before March, nonprofits nationwide employed 12.3 million people—more than airlines or the manufacturing industry. So far into the pandemic, that industry has lost nearly 1 million jobs, and even more are at risk after the money from PPP loans has run out. Nonprofits have added expenses this year too, from all the equipment needed to keep their volunteers safe, such as masks and sanitizer, to the cost of having to transition to online operations.

“Absent a deal happening in Washington, we’re probably going to have more nonprofit employees unemployed, taking tens of thousands of people who work to help others and have them instead needing help themselves,” Cohen says. And that’s as Americans are heading toward a “triple cliff” of unemployment benefits running out, eviction moratoriums ending, and the forbearance on student loans coming to a close.

And with state governments facing huge budget gaps, many government grants and contracts to nonprofits have been suspended. That means nonprofits aren’t being paid by governments even as their services see a higher demand, putting added pressure on individual donations. “We’re unlike other industries in that when demand is up, it doesn’t mean that revenue is up,” says Cohen. “In a lot of cases it’s the opposite.”

Along with knowing about the CARES act provision, the National Council of Nonprofits is urging those who can give to donate so that nonprofits can afford PPE and keep people on staff, to give locally to the small nonprofits near them that need their help, and to look for the nonprofits that have the biggest community impact. Giving money isn’t the only way to help, either. If you can’t afford to donate this year, Cohen says you can call your local nonprofit up and ask if there’s another way to help them. But the real solution, he says, must come from Washington: The council is asking Congress to make sure that any potential future coronavirus relief bill includes more priorities for nonprofits.

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“That relief package is needed even more than a record-breaking Giving Tuesday,” he says. “There’s just so much need out there that a relief package is what’s necessary to really help the nonprofit sector.”