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CARES Act offers new incentive for Woods donors

News | 04.24.2020

“We truly count on the generosity and support of our alumni and friends to help fund our mission. Now more than ever, the College is relying on unrestricted gifts to help provide for our students so that learning may continue unimpeded during this time of national crisis,” said Karen Dyer, vice president of advancement and strategic initiatives at Saint Mary-of-the-Woods College (SMWC).

With the announcement of the federal stimulus package, the Coronavirus Aid, Relief, and Economic Security, or CARES Act, Woods alumni and friends now have an added incentive to support SMWC during the pandemic crisis through the creation of an above-the-line $300 charitable income tax deduction.

“Our Woods donors have been very loyal over the past few years, supporting the institution’s momentum through investing in the growth of new programs, updated facilities and expanded enrollment,” said “These measures will hopefully encourage our constituents to continue to give to The Woods and other nonprofits across the nation as we each face severe financial strain and hardships due to the COVID-19 pandemic.”

The bill allows for a temporary universal charitable deduction up to $300 to be made to nonprofits, such as The Woods this year and can be claimed on personal income tax filings next year. For corporations, the same cap was increased from 10% to 25%.  It’s an above-the-line deduction, meaning you don’t have to itemize to claim the deduction. Contributions must be cash donation(s). The bill increases the cap on annual gifts from 60 percent of adjusted gross income to 100 percent.

Prior to the pandemic crisis, SMWC has been well on its way towards attainting its $1.1 million Woods Fund goal, which it relies on annually for operations and scholarships. With two months remaining in the fiscal year, the College will look to raise $200,000 by June 30, 2020.

Brief overview of CARES Act charitable giving incentives

Temporary Universal Charitable Deduction

Taxpayers who do not itemize their deductions can take a one-time deduction of up to $300 for gifts made to charitable organizations. The deduction is only for gifts of cash made in calendar year 2020 and does not cover other types of gifts or contributions made to donor-advised funds or private foundations.

Suspends the adjusted gross income limitation for individuals’ charitable contributions

In a typical year, individuals may only take a charitable deduction of up to 60 percent of their adjusted gross income, no matter how much they give. For 2020, there is no limit, making cash contributions fully deductible.

Waives the 2020 RMD for most retirement plans and IRAs

Any minimum distributions from retirement plans that would have been required in 2020 can be delayed until 2021. This change reduces the incentive for donors to make gifts from their individual retirement account (IRA)—the IRA Rollover Provision.

The Tax Code still allows individuals 70 ½ or over to transfer up to $100,000 from their IRA to charities through a qualified charitable distribution (QCD), also called a charitable IRA rollover. In any other year, the amount rolled over to charity as a QCD would count toward the required minimum distribution. Even in 2020 there are reasons to use a QCD to support charities, including: 

  • A QCD is an easy way to support a cause you care about – particularly at this time of need,
  • The amount transferred as a QCD is not counted in taxable income,
  • And it reduces the IRA account balance by the amount of the QCD, and consequently, reduces future RMDs.

Source for more information: The Association of Fundraising Professionals

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