The Top Six CARES Act and Charitable Contribution Updates

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, a $2.2 trillion economic stimulus bill, was signed into law on March 27, 2020 as a way to ease the burden of the COVID-19 pandemic on Americans.

In addition to the more well-known direct payments to families and additional unemployment funds, the stimulus package includes a number of tax benefits meant to incentive charitable contributions.

Below are the top six CARES Act updates to know while considering your charitable contributions:

1. Cash Gifts

If you are among the 90 percent of American taxpayers who take the standard deduction, you may now deduct $300 in charitable gifts from your gross income. This above-the-line deduction applies only to cash gifts made directly to nonprofits. They cannot be made into a donor-advised fund.

2. 100% Charitable Deduction

The CARES Act stipulates that you may now deduct cash gifts up to 100 percent of your adjusted gross income (AGI) in 2020. Gifts made directly to charities, regardless of whether they relate to Covid-19 relief, qualify. The previous deduction limit for cash gifts was 60 percent.

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3. Gifts From Your IRA

To help individuals retain funds in their retirement accounts, Congress opted to waive the required minimum distribution (RMD) from IRAs for 2020.  However, loyal supporters over 70 ½ can still make a qualified charitable distribution to ministry if they wish, since this remains a cost-effective way to give.

4. Corporate Gifts

Corporations can now deduct outright charitable contributions up to 25 percent of income rather than the previous 10 percent limit. For contributions of food inventory, the deduction limit went from 15 percent to 25 percent of income.

5. Stock and Other Non-Cash Assets

Giving appreciated stock, real estate, or other non-cash assets remains the most cost-effective giving option. This is because the donor will receive a fair market value deduction at the time of your gift and avoid capital gains on the sale of appreciated assets.

If you have already made gifts of stock or other assets into a donor-advised fund, now is a great time to make distributions from your account.

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6. Gifts in a Will

Many people make their most significant contribution to nonprofits by leaving charitable gifts in their will. An “ultimate gift” allows you to retain access to your resources for as long as you may need them while ensuring your favorite charities continue to make a difference well beyond your lifetime, and the CARES Act has not changed this.

The CARES Act and Lifewater International

For over 40 years, Lifewater has operated as a faith-based clean water and community health organization committed to helping families living in extreme poverty thrive. Lifewater currently holds Charity Navigator’s coveted four-star charity rating.

Using local-knowledge and industry-best practices in WASH (water access, sanitation, and hygiene), Lifewater brings clean water to remote communities in great need, generating a transformation that’s built to last. Through the Lifewater Legacy Society, you can leave a lasting legacy of generosity while ensuring your loved ones are well cared for.

“Lifewater blesses both the giver and receiver with the gift of clean water,” Cary A. Paine, President of The Stewardship Foundation, said. “We are confident that their work will have a life sustaining impact and be done well.”

Contact one of our expert representatives today at representative@lifewater.org to learn more about how you can give charitable contributions with Lifewater.

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