CARES Act includes Universal Charitable Deduction, financial relief for nonprofits

The latest Coronavirus stimulus package, the CARES Act, was signed into law Friday, creating a temporary Universal Charitable Deduction and providing nonprofits with access to emergency loans.

While the Universal Charitable Deduction provision doesn’t go quite as far as CCF had hoped, it’s still a positive step to encourage more charitable giving during a time of great need.

The legislation creates a new above-the-line deduction that applies to all taxpayers for total charitable contributions of up to $300. The incentive applies to donations made to nonprofits this year and can be claimed on personal income tax filings next year. The measure also lifts an existing cap on annual contributions for itemizers of 60 percent of adjusted gross income to 100 percent. For corporations, the same cap was increased from 10 percent to 25 percent.

These changes will hopefully encourage more Americans to support nonprofits across the country facing financial strain due to the COVID-19 pandemic.

Nonprofit advocates have been pushing for a Universal Charitable Deduction since the Tax Cuts and Jobs Act of 2017 was passed, because it reduced the incentive for many Americans to itemize charitable donations on their personal income taxes. The creation of a Universal Charitable Deduction is among Coastal Community Foundation’s 2020 Policy Agenda priorities because it encourages and rewards the largest number of people to engage in charitable giving.

The CARES Act also included other ways help 501(c)(3) nonprofits seek financial relief. Most notably, nonprofits are now eligible to apply for Emergency Small Business Loans of up to $10 million.

U.S. Sen Tim Scott’s office has provided guidance to South Carolina nonprofits about this opportunity in a Frequently Asked Questions Document. More helpful information can be found in this Nonprofit Guide to the CARES Act.

The National Council on Nonprofits is also hosting a free webinar at 3:30 p.m. Tuesday, March 31, to overview what the stimulus package means for nonprofits. You can register online here.

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