The COVID-19 relief legislation signed into law in December 2020 includes some provisions that could be a boost to donors and the nonprofits they support. For example, it extends the temporary “universal charitable deduction” for taxpayers who don’t itemize their deductions through 2021.
The deduction was limited to $300 for cash contributions to qualified charities for both individuals and married couples filing jointly in 2020. But couples can deduct up to $600 for 2021. Many taxpayers are unaware of this opportunity, so nonprofits should highlight it in appeals throughout the year.
The relief package also includes another round of funding for first-time or so-called “second-draw” forgivable loans under the Paycheck Protection Program — including for qualifying 501(c)(6) organizations, which weren’t eligible for the first round. In addition, borrowers can use the funds for a wider array of expenses than previously allowed. These include certain operating expenses, property damage costs and worker protection costs.
How the pandemic has changed planned giving
Gift planning programs are experiencing higher interest since the emergence of COVID-19, according to a National Association of Charitable Gift Planners survey of 328 organizations. Sixty-two percent of respondents reported greater donor enthusiasm for charitable bequests, followed by donor-advised funds (54%) and retirement plan beneficiary designations (52%).
Forty-five percent saw more interest in qualified charitable distributions. Charitable gift annuities also attracted greater attention for 30% of respondents. Charitable remainder trusts and charitable lead trusts drew the least amount of new interest (15% and 4%, respectively).
The findings reinforce the value of gift planning programs, even in a challenging environment. The researchers encourage organizations to continue marketing their programs. Despite early concerns that such efforts might seem insensitive during a pandemic, they say that donors have been receptive.
Volunteerism suffers in the face of COVID-19
Two-thirds of volunteers reduced or stopped their contributions of time due to the pandemic. That’s one finding from a recent study conducted by Fidelity Charitable, an independent public charity and grantmaker. (By contrast, in a March 2020 Fidelity survey performed before social distancing guidelines were issued, 30% of respondents said they’d increased their volunteering time in the previous two years.)
Among those who continued to volunteer, 65% turned to virtual or remote opportunities. Pre-pandemic, only 19% of volunteer activity was performed remotely.
Notably, 64% of those who hadn’t tried virtual or remote volunteer activities didn’t know how to find such opportunities, and 73% said they planned to return to volunteering when it’s safe. These figures suggest nonprofits should take steps to educate supporters about how they can continue to help safely.
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