As we enter the final months of this unusual year, many people will be considering year-end charitable giving. Charitable gift planners and development officers know this giving season all too well. It goes without saying that 2020 has been a challenging year, and the fourth quarter seems to have snuck up quickly. Given the host of charitable tax law changes over the last 36 months, a refresher might be useful.
The 2017 Tax Cuts and Jobs Act: First, it is worth remembering that the 2017 Tax Cuts and Jobs Act increased the deductibility of cash contributions. Prior to the TCJA, cash gifts were deductible only to the extent of 50% of the donor’s adjusted gross income. TCJA increased that to 60%.
This 60% contribution obviously makes cash gifts more appealing for individual donors. However, it also can act to reduce the unrelated business income tax
In 2019, U.S. giving to charity totaled nearly $450 billion. Historically, nearly one-third of that amount takes place in December, with 12% of all giving occurring in the last three days of the year.
December and last-minute giving is often rushed, not well-planned, nor strategic. To maximize the impact of your giving, whether personal or in your business, start planning your approach to year-end donations now. There are a number of steps you can take to ensure your donations have a lasting and significant impact.
Engage your family members in conversations about what issues and causes are most important to them. Especially in this year of a pandemic, climate change impact, voting rights challenges, racial justice efforts, income and health disparities, and economic uncertainty (for nonprofits, too), meaningful conversations between and among generations about how a family wants to make the greatest impact are essential.