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Charitable Giving Advocates Welcome Enhanced Deduction in Bill

Posted on Sep. 10, 2020

Nonprofit sector advocates are cheering a provision in COVID-19 economic relief legislation that would temporarily expand the tax break for charitable giving.

An amendment to the bill would raise the $300 cap on the temporary charitable deduction for non-itemizers established by the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) to $600 for individuals and $1,200 for joint filers for tax year 2020.

Senate Finance Committee member James Lankford, R-Okla., author of the Universal Giving Pandemic Response Act (S. 4032), which would boost the deduction amount to one-third of the standard deduction, praised the amendment.

“It is good policy to incentivize giving to local entities that care for our neighbors since nonprofits and houses of worship are much more efficient and more personal as they care for families in crisis,” Lankford said.

“Even if you do not itemize your taxes, this bill directly reduces the tax burden on any family who gives to a nonprofit that benefits families, and it strengthens nonprofits in every ZIP code of the nation,” Lankford said in a September 8 release.

“The charitable sector has been working hard since the passage of the CARES Act in March to expand the temporary $300 charitable deduction for non-itemizing taxpayers, and this indicates that advocacy is working,” Sandra Swirski of the Alliance for Charitable Reform said in a statement. 

“Lawmakers clearly recognize the importance of driving resources to the charitable sector to provide critical services to communities across the country during these uncertain times,” Swirski said. 

“Increasing the temporary charitable deduction is a step in the right direction,” said David Kass of the Council on Foundations. “We are encouraged that this provision was included and will continue to work with lawmakers to expand it moving forward.”

“The increased cap on the deduction is a good step in the right direction,” said Brian Flahaven of the Charitable Giving Coalition. “At a time when demand for charitable services is high and donations are low, it’s important that Congress encourages all Americans to donate more to charity, regardless of whether they itemize their taxes.”

The amendment “makes significant improvements to the above-the-line deduction,” said David L. Thompson of the National Council of Nonprofits. “We very much appreciate the recognition that charitable giving needs to be given a boost as Congress considers stimulating the economy.” 

More Help Needed 

However, Thompson expressed disappointment that the enhanced deduction would be valid for only a few months, expiring well before economists predict the recession will end.

“While helpful, this charitable giving incentive needs to be increased and extended into next year for it to truly help local communities,” Thompson said.

Also troubling is the inclusion of increased civil penalties for overstating a qualified charitable deduction for non-itemizers, Thompson said. The “inclusion of an increased tax penalty just for those taking the above-the-line deduction . . . seems to assume that some taxpayers are less honest than others,” he said.

“While we applaud the expansion of the cap on the temporary universal charitable deduction included in the most recent Senate COVID-19 relief bill, research shows the entire package falls short in providing the critical support needed for nonprofits and the communities they serve,” said Dan Cardinali of Independent Sector.

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