The new stimulus bill makes giving to charities more attractive, but is it enough for struggling nonprofits?


The federal government is opening its portfolio with a $ 900 billion coronavirus bailout aimed at supporting struggling businesses and households.

The newly passed bill also expands and broadens tax incentives for people to open their wallets to make charitable donations in 2021.

The CARES law in March established what is called a “universal charitable deduction” for 2020. As tax season approaches, this will allow taxpayers to claim the standard deduction, followed by a deduction for charitable donations of up to $ 300. And they don’t have to worry about itemizing to get that deduction.

The new rescue package, that happened on monday night in the House of Representatives and the Senate, extends the universal charity deduction until 2021.

What else, the new bill will allow married couples to deduct up to $ 600 above the line for their 2021 donations. This year, the same “over the line” deduction of $ 300 applied to both individuals and married couples.

Contributions to nonprofits are generally tax deductible, but traditionally deductions only start to reduce tax bills when a person makes itemized deductions.

The point is, the majority of taxpayers opt for the standard deduction because it makes more financial sense for them. During the next tax season, the standard deduction will be $ 24,800 for married couples and $ 12,400 for individuals.

Past calculations show that there may be small reductions in the tax bill when using the above-line deduction, such as $ 66 on income tax for a household earning $ 100,000. But for many, charitable giving is not motivated by a tax strategy, especially at such a difficult time.

In a year when their services are in greater demand than ever, nonprofits have seen ups and downs for their balance sheets, observers told MarketWatch.

Since March, charitable nonprofits have cut nearly a million jobs and “thousands” of organizations are now permanently closed, said Tim Delaney, CEO of the National Council of Nonprofits, on Monday.

Data Give Tuesday, an initiative encouraging people to donate on the Tuesday after Thanksgiving, said Americans donated $ 2.47 billion on this year’s Giving Tuesday, a 25% increase over the year former.

Charities and nonprofits “can welcome the positive direction in some aspects” of the new stimulus package, Delaney said in a statement Monday. The extension of the universal charitable contribution is one example, he noted.

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The bill is “a critical temporary measure,” Delaney said, “but it does not do enough to protect the nation’s nonprofit charities – the organizations that tens of millions of Americans rely on for essential supports such as housing, food, mental health services and child care.

For example, said Delaney, the rules surrounding the next round of money in the Paycheque Protection Program may exclude medium and large-sized organizations and reject organizations that have been left afloat due to their first round of PPP funding.


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