COVID-19 and CARES Act Update to SECURE Act Article

April 7, 2019

COVID-19 UPDATE AND NOTE:

With uncertainty and changing landscape amid the COVID-19 pandemic, nonprofit organizations should exercise even higher than ordinary thoughtfulness and sensitivity in determining whether and when to send donor communications, including planned giving messaging.  Many public media stations are postponing or reviewing current planned giving messaging to avoid upsetting supporters and others who may be particularly sensitive to messaging regarding estate planning.

Additionally, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27^th, 2020.  This landmark legislation included some provisions related to or affecting charitable giving.  The expanded provisions for Economic Injury Disaster Loans could be make-or-break for some organizations but have a more indirect effect on charitable giving.  Three other pieces of the CARES Act relevant to charitable giving are:

• The above-the-line deduction of up to $300 for non-itemizers (people who take the standard deduction on their income tax returns) who make cash gifts to qualified charities.  This is a new incentive for a large number of individuals to make cash gifts to charity, where before they received no tax benefit from charitable giving.
• The temporary increase of the 60% of adjusted gross income (“AGI”) deduction limitation to up to 100% of AGI for cash gifts to charities.  This means that donors making large cash gifts can completely offset their income for 2020.
• The suspension of required minimum distributions (“RMDs”) from qualified retirement accounts in 2020.  This could mean that some people who otherwise would have made qualified charitable distributions (“QCDs”) from their IRAs this year might not.

If you decide to create messaging for your donors about either the CARES Act or SECURE Act changes, it may be advisable to combine them into one, with a theme in the vein of “recent changes in the law affecting charitable giving” and hit on key points of both.