Bangor Daily News, Opinion
December 22, 2020
by Lynn Hempen
Senior Counsel, Gary Friedmann & Associates
Giving is a holiday tradition. Nonprofits typically receive 30 percent of their annual budgets this month. This holiday season, like the rest of 2020, is anything but typical. However, even as families have abandoned or reimagined many traditions this year, their tradition of giving appears to have remained intact or, in many cases, strengthened. From a donor standpoint, it makes sense: this moment stands out as an extremely advantageous time to make philanthropic gifts, perhaps the best in decades.
We give because we want to help others in need. But an understanding of the tax benefits available to donors can incentivize some to make a first or larger-than-normal gift. Right now, there are several benefits to be aware of regardless of your tax bracket.
Two benefits from the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress in March are set to expire Dec. 31:
For donors who take the standard deduction, all cash gifts of up to $300 for individuals, or $600 for couples filing jointly, qualify as special “above the line” deductions.
For donors who itemize, the charitable deduction this year has been raised from 60 percent to 100 percent of adjusted gross income. For donors who have made multi-year pledges, this may make it advantageous to increase or add to their 2020 gift payment. It may enable others to make a larger one-time gift than otherwise would have been possible.
The increased deduction also provides an opportunity for individuals between 59½ and 70½ years old who are not dependent on income from their IRA: a cash distribution from their IRA that they contribute to charity may completely offset the tax attributable to the distribution.
The stock market’s current strength offers another opportunity for donors to make larger gifts than they otherwise might have by contributing long-term appreciated stock or other marketable securities, avoiding taxes on capital gains.
Maine’s nonprofits are responding to 2020’s unprecedented health, economic, and racial injustice crises in extraordinary ways. Where there is growing need, they are expanding services and providing increasingly innovative solutions. A commensurate growth in donor support can sustain their work.
As MacKenzie Scott, one of the world’s wealthiest and most philanthropic people, wrote in a July blog post, “Life will never stop finding fresh ways to expose inequities in our systems; or waking us up to the fact that a civilization this imbalanced is not only unjust, but also unstable. What fills me with hope is the thought of what will come if each of us reflects on what we can offer. Opportunities that flowed from the mere chance of skin color, sexual orientation, gender, or zip code may have yielded resources that can be powerful levers for change. People troubled by recent events can make new connections between privileges they’ve enjoyed and benefits they’ve taken for granted.”
Maine’s nonprofits nourish us, keep us healthy, provide critical resources for families and children, protect our natural resources, and offer our communities enriching cultural opportunities. They employ 1 in 6 Maine workers and play an important role in our economy.
This year, many Mainers are suffering, and our nonprofit organizations are stretching to their limits to provide services that benefit us all. If you find yourself in a position to support your favorite charities with a first, an additional, or your largest-ever gift, December 2020 is the most wonderful time.
