Will New $300 Tax Deduction Spur Donations to Charity?

Will New $300 Tax Deduction Spur Donations to Charity?

The coronavirus or COVID-19 pandemic has made nonprofit charities in the U.S. and abroad more crucial than ever. They’re a key part of the safety net, providing support to people who are hungry, unhoused, ill, or face other life challenges.

Yet the pandemic has impacted donors’ very ability to make contributions, or at least their confidence in parting with hard-earned cash given the uncertainty of the future, economic and otherwise.

In a global survey of charities by CAF America, nearly all responding organizations said they were negatively impacted by the pandemic. Almost 15% were forced to suspend operations, 60% were forced to eliminate or suspend some programs and services, and over 70% are facing a significant drop in contributions.

The question is, have people heard the news that the CARES Act, which Congress passed in response to the pandemic, included a $300 universal tax deduction on 2020 returns for donations to charity? This amendment was meant to alleviate the problem created by the latest tax reform, in which anyone who doesn’t itemize deductions found that their charitable donations were practically worthless. The newly high standard deduction is, for most taxpayers, a more advantageous choice than itemizing. This new $300 deduction is available to non-itemizers.

One hundred percent of the people I’ve surveyed hadn’t heard of the new deduction. Unfortunately I’m working at home while sheltering in place, so that totals one person. Nevertheless, I suspect the word isn’t getting out as widely as it could. Analysts talking to the media aren’t optimistic either, saying the deduction needs to be better advertised.

The bottom line is that charities need our help more than ever. And while a tax deduction probably isn’t first on the list of reasons we choose to give to charity, it can certainly be a helpful boost when feeling uncertain. Spread the word!

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