The CARES Act and Your Capital Campaign: Make Your Move Before 2020 Ends
Guest post by Kevin Wallace, President, CampaignCounsel.org
There have been few bright spots for fundraisers in 2020. Yes, major-gift donors are still giving according to recent donor confidence surveys, but our country’s – our world’s – overall demeanor is rife with uncertainty. But there are success stories out there. Take, for example, one client of ours that is wrapping up a campaign for athletic facilities. Their campaign stalled from February through September. We remained engaged with our donors and donor prospects but withheld solicitations. Recently, however, the campaign has picked back up. Why? Because people want a “win” in 2020! And gratefully, the Federal Government is providing financial incentives for philanthropic wins.
As we approach the end of 2020, now is the final chance for nonprofits to share with their U.S. donors the charitable giving incentives created by the CARES Act. These communications may even create opportunities to close on a donor’s initial gift or approach them for a second gift in 2020.
Explore the act below to see how sharing it with your donors might help them while helping you too. This is information to get you started. Speak with your legal and tax experts for advice on how to proceed.
What is the CARES Act?
In March 2020, the U.S. Congress passed a sweeping $2.2 trillion stimulus bill in response to COVID-19, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The act provided aid to U.S. businesses and nonprofits affected by the pandemic and created tax benefits for almost any U.S. taxpayer who makes charitable contributions in 2020.
Of interest to higher-net-worth individuals is the elimination for 2020 of the cap on how much of a taxpayer’s charitable donations can be deducted against income. The act also benefits those who take the standard deduction and do not itemize. They can claim a deduction in 2020 for up to $300 in charitable giving by an individual or $600 for a household filing jointly.
Informing your donors and capital campaign prospects about the tax benefits created by the CARES Act may incentivize them to make an initial or even second gift to your nonprofit. Let’s explore the act’s benefits to charitable givers a little more and think about the best ways to communicate those benefits to donors.
CARES Act Raises the Charitable Giving Deduction Cap
Prior to 2020, higher-net-worth households who itemize their deductions, including gifts to charity, faced caps on how much of their charitable donations could be deducted: a maximum of 60% of adjusted gross income for cash donations.
The CARES Act eliminates this cap for 2020, allowing households to deduct cash gifts of up to 100% of their adjusted gross income, which could effectively eliminate a taxpayer’s federal tax liability in 2020. Cash contributions are fully deductible.
Caps on corporate giving also rose under the CARES Act. Previously, corporations were able to deduct charitable donations up to 10% of taxable income. The act raises that cap to 25% for 2020.
$300 Universal Charitable Deduction Benefits Non-Itemizers
For those who take the standard deduction and do not itemize, the CARES Act also establishes a $300 universal charitable deduction in 2020. These taxpayers can deduct donations directly to a charity of up to $300 per individual or $600 for joint filers on their 2020 federal tax return above the standard deduction.
What should I do with this information?
Since the people who have the most to gain from the charitable giving provisions of the CARES Act may be major-gift donors, sharing this information during your capital campaign may be a useful way to approach them for a second gift. The best way to do this is to schedule a meeting. Offer your heartfelt thanks for his current 2020 commitment. Then ask, “Did you know that your gift is eligible for a 100% tax deduction under the CARES Act?” Share what the campaign still needs and allow that conversation to open to their consideration of a second gift.
The same question can be posed to a new donor and may help motivate her to make the commitment before year-end.
These are difficult times for all of us, but that does not mean that we can’t find wins! Keep engaging with your donor constituents. Continue promoting the good works your nonprofit is doing. Encourage people to give to your mission and vision, and when appropriate, share the incentives created by the CARES Act.
For more, join us for a live iWave webinar presentation: “Mapping Your Capital Campaign for 2021: A Roadmap for Today’s Challenges” on Dec. 3 at 1 p.m. ET. Learn how your nonprofit can move forward with its capital campaign in the current environment as we discuss in detail how to assess your fundraising potential, plan for new challenges, and expand your definition of campaign success. As 2020 began, you had a brilliant roadmap to guide you to your fundraising destinations. The events of 2020 may have presented major roadblocks, but it’s time to get behind the wheel again!
About the Author: Kevin Wallace is president of CampaignCounsel.org, specializing in capital campaign planning and management. Kevin has more than 17 years of capital campaign experience, conducting more than 80 campaign planning studies and capital campaigns around the country that have raised more than $200 million. Reach him by email or visit www.campaigncounsel.org.
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