The coronavirus pandemic has affected nearly every aspect of our lives, and it has had a profound impact on local businesses, nonprofits, and governments. It has also left many individuals and families out of work or in need of basic supports to remain healthy and safe in their homes. Charitable organizations across the New River Valley have seen an increase in demand for basic human services, while others focused have had to cancel or postpone critical fundraising events, leaving agencies to make tough budget cuts and program changes.
So, what does this mean for philanthropic giving? Should you continue giving? Should you start giving? What are the best ways to support organizations in such a difficult time. If you have the ability, absolutely, you should make donation to a local nonprofit today! Not only will your gift make a difference for neighbors in need but giving is even more advantageous now with new provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed earlier this year. Below we outline some tools and policy changes that make giving easy and more advantageous, and we share what we have learned at the CFNRV about what organizations navigating the pandemic truly need.
Giving Tools and Policy Changes
- Increased Deductibility for Cash Gifts: Donors contribute for many reasons, including for the tax advantages of making a tax-deductible gift. Before the CARES Act, you could deduct up to 60% of your adjusted gross income (AGI) with charitable contributions if you itemize your deductions. Under the new CARES ACT guidelines, in 2020, you can deduct 100% of your AGI to qualified nonprofit organizations. You can always donate more than your annual AGI and carry that over to future years when the 60% rule is back in place.
After the significant increase to the standard deduction in 2017, many individuals that gave to a charity stopped itemizing their deductions, stopped giving, or changed the amount they gave. In 2020, if you don’t itemize like 85% of taxpayers, you can now claim up to $300 in charitable contributions on your taxes. This may seem small, but more than 75% of the gifts made to the CFNRV annually are less than $1,000. Small gifts make a huge impact for nonprofit organizations. No gift is too small! There are also additional advantages for corporate donors. Corporations that may give 25% of their corporate taxable income this year, up from 10% in previous years. - Increased Deductibility for Certain In-Kind Gifts: The CARES Act is also incentivizing food donations for the 2020 year by raising the tax deduction from 15% to 25% as food insecurity has been heightened during this pandemic.
- Qualified Charitable Contributions from an IRA: Required Minimum Distributions (RMD)s from your IRA are suspended as part of the CARES Act not only for 2020, but for 2019 RMD’s that needed to be taken by April 1, 2020. However, this is still an important giving tool available to you. You can distribute up to $100,000 from your IRA to a qualified charitable organization, such as a 501c3 nonprofit. While you won’t receive a tax deduction, the distribution will not count toward your taxable income for the year. Please note that donors cannot give to donor advised funds with this tool.
The CFNRV cannot provide financial or legal advice, and you should always contact your tax professional to choose the best tools for you. We are happy, though, to talk about starting or adding to an endowed fund using these or other giving tools.
What We Have Learned About Giving During COVID
We are incredibly fortunate to have deep relationships with well over 200 nonprofit organizations and programs serving the NRV. We have always prioritized listening to nonprofit leaders as we design our grant and leadership programs, but we have redoubled those efforts in 2020. We’ve learned some key lessons as funders:
- Give with No or Few Restrictions: In late March, the CFNRV announced COVID-19 Response Grants for nonprofits in our community that were awarded in April, May and June. Nonprofits could apply for up to $2,000 of general support with no restriction on the use of the funds for a specific program or purpose. We received over 100 applications and ultimately awarded $76,250 to 39 different organizations. The response to the awards was overwhelmingly positive, as nonprofits appreciated the flexibility to put the funds where they were needed most.
We similarly revised the parameters for our fall Responsive Grant Program to award only unrestricted grants of up to $4,000. It is tempting to target your gift to a specific program or purpose, but flexibility is key right now, and organizations need funds to support their staff and keep the lights on! Consider making an unrestricted gift to your favorite organization. If you’re not comfortable with that approach, contact them before making a gift to learn how you can support their most immediate and pressing needs. - Investing in Relationships and Collaboration Matters, Especially Now: In 2015, the CFNRV launched several collaborative initiatives as part of The Fund for the NRV focused on early childhood education, food assistance, aging in place, and leadership development. Since then, we have invested time and funding in building strong relationships between organizations based on the belief that networks of organizations, able to trust and work with one another, can tackle major challenges and accomplish what no single agency could do alone. Little did we know that these investments would prove crucial to navigating the pandemic. When COVID hit, these agencies had existing, deep relationships to draw upon.
They found ways to support one another’s clients, make referrals, and collaborate to meet an increased demand. Food pantries and feeding programs involved in the Thrive network have worked together to provide fresh food to families in need with support from the NRV Glean Team, and to collaborate with the Millstone Kitchen and HazelBea Catering to deliver meals to clients isolated at home. Outside of the networks the CFNRV manages, there are countless examples of how existing collaborative relationships proved key to responding to the pandemic quickly and effectively, including the NRV Public Health Task Force and the Giles County FOCUS program.
It is tempting to give only to specific programs with easily quantifiable metrics, but don’t underestimate the importance of contributing to a collaborative effort, or simply to the operations of an agency whose staff strive to collaborate well and often. These investments pay long-term dividends for our region, making us more resilient. For more information on these efforts at the CFNRV, visit https://cfnrv.org/partnerships-initiatives/fund-for-the-nrv/.
Stay tuned for additional ways to support the community during COVID-19, and for upcoming virtual discussions on the most effective ways to support nonprofits this year.