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Jackson YMCA: CARES Act maximizes tax savings, charitable giving

Posted at 10:56 AM, Dec 09, 2020
and last updated 2020-12-09 10:56:36-05

LANSING, Mich. — The Jackson YMCA and other nonprofits in Jackson County have stepped up in service to the community throughout the pandemic. Working collaboratively through the Jackson COVID-19 Action Network (JCAN), nonprofits have prepared and distributed free meals to thousands of individuals and families as well collected and delivered needed supplies to homes in need. In partnership, providers like the YMCA, Jackson School of the Arts and Jackson Public Schools have offered childcare and educational and recreational programming to help parents during this time of shutdowns and social distancing.

Where there is need, nonprofits have worked together to address it. The sustaining efforts of Jackson County’s nonprofit network has been broadly supported by generous donations from individuals and families as well as local businesses, corporations and foundations. The CARES Act (Coronavirus Aid, Relief and Economic Security Act), set to expire at the end of December, offers past and potential donors a unique opportunity to maximize both their charitable contributions to local nonprofit organizations and realize significant tax benefits.

Signed into law in March, the CARES Act includes changes to tax deductibility of charitable gifts for 2020, offering an unprecedented opportunity for donors to maximize donations to their charities of choice. For instance:

  • The adjusted gross income (AGI) deductibility limit for gifts of cash by individuals is now 100 percent, up from 60 percent.
  • Taxpayers who do not itemize deductions may take a charitable deduction of up to $300 for cash contributions in 2020 to qualifying organizations. Previously taxpayers had to itemize.

“Nonprofits are seeing escalating requests for assistance while their budgets are significantly impacted by challenges related to COVID,” said Stefanie Riggs, the Director of Development and Community Relations for the Jackson YMCA. “At the Jackson YMCA, for instance, we have offered meal and personal needs item distribution since March and have seen that need continue to grow.”

Carolyn Moser, the Executive Director at the Jackson School of the Arts (JSA), confirmed that community nonprofits need support now more than ever. JSA offers year-round arts programming for youth and adults. This summer campers at the Jackson YMCA attended weekly art and dance classes at the JSA.

“Every dollar makes a difference,” Moser said. “At Jackson School of the Arts, more than 70 percent of our students are low to moderate-income and rely on financial assistance. We believe the arts should be accessible to everyone in Jackson County!”

Big Brothers Big Sisters (BBBS) and the Dahlem Center Conservancy both see a great need in the community and urge donors to take advantage of the CARES Act benefits.

“We currently have a gap of around 50 Littles on our waitlist that are hoping for a Big Brother or Big Sister in the near future,” said Tony Hollow, the BBBS Executive Director. “Financial support not only allows us to recruit and market for our nonprofit but helps us meet the expenses of securing our current mentoring relationships.”

Through a partnership with the Y, Bigs and Littles have been able to access the Y to work out, play basketball or do fun activities. This too has been impacted by the pandemic, particularly during the six months the Y was mandated to close.

The CARES Act has ignited interest among individuals and corporations to augment their cash gifts to charitable organizations this year and reduce their taxable income. For individuals, it is possible to reduce their federal taxable income to zero. As an example:

“Angela’s” Example:

  • Angela’s estimated AGI for 2020 is $1 million. She wants to make a significant charitable gift of cash to her favorite nonprofit, and her advisors have encouraged her to give in a tax-smart way under the CARES Act.
  • Before the CARES Act, the largest cash gift she could make this year and fully absorb the deduction was $600,000 (60% x $1 million AGI).
  • Now, thanks to the CARES Act’s removal of the 60% limitation, she can make a charitable gift of $1 million this year and fully absorb the entire $1 million of the deduction in 2020. In other words, she has an opportunity to make a bigger impact ($400,000 more in giving) while paying zero federal income tax in 2020.
  • The extra $400,000 in deducted income, assuming an effective federal income tax rate of 33%, saves her an extra $132,000 in taxes owed for 2020. In other words, the extra $400,000 in giving only cost her $268,000 to make.

“Whether it’s the $300 deduction or a larger gift, all donors can not only realize tax benefits but make a valuable donation to nonprofits that are near to their heart,” said Riggs, adding that donors should speak with their tax advisors for more information. “Nonprofits are an indispensable part of our community’s infrastructure. Making a gift to a Jackson nonprofit is an investment in our kids, our health, and our neighbors.”

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