The Hidden Covid Victim(s)

It has been quite a year.  Depending on where you live, things have either been mildly inconvenient for you (Florida) or you have had to adapt to an entirely new approach to life (too many places to list).  At this point, most, if not all, of us know someone who has suffered with Covid (I know that at least a handful of you reading this have had it yourselves).  Many of us have also lost friends and/or loved ones to the virus or to conditions exacerbated by the virus and/or lockdowns. While it is easy to focus on the personal impacts of Covid, if you’ll indulge me, I’d like to change your focus a bit. 

There is a victim of Covid that has gone unnoticed by many – the nonprofit community.  As many of you know, I have served on nonprofit boards for years.  I currently serve as President of a nonprofit that provides funding to other nonprofits, so I have a better opportunity than most to take a deeper dive into the needs of nonprofits.  Let me tell you, it is not pretty.

Many nonprofits, particularly the smaller ones, have one or two large events each year that result in a significant percentage of their funding.  With Covid-related lockdowns and social distancing requirements, these events were not feasible this year.  While efforts were made by many to conduct virtual events, the outcomes just weren’t the same.  As a result, many nonprofits are suffering from significantly reduced revenues.  While there may be reserves and disaster plans, the well is only so deep.  More importantly, there is another challenge - increased costs.

Due to Covid, a lot of people are struggling. There are increasing incidences of mental health issues, an increased need for food support, more need to support those with illnesses that are being diagnosed later than normal.  So, demand (i.e., cost) is up.  As if that is not enough, due to our Covid-related reality, methods of delivering services have had to change, resulting in even greater costs.

Put it all together and what do you have?  Lower revenues and increased costs are effectively a recipe for disaster unless there is some type of intervention.

Fortunately, WE are that intervention.

You may be wondering how you can help.  There are a few ways:

Consider a monetary donation: If you have the wherewithal, a cash donation can directly address the need.  With passage of the CARES Act, Congress also enhanced the tax benefits of giving (more on that below).

Consider giving “things”:  While cash goes a long way, in a lot of cases, the cash is used to buy things.  Donations of food, toys, animal supplies, office supplies and other tangible goods means that the cash given by others can be used on other things.

Consider remote volunteering: In-person volunteering is challenging given our currently reality, but many nonprofits can still benefit from your expertise and commitment to the cause.  There may be opportunities to continue helping out from afar.

The CARES Act – Helping others can help you too!

We can spend hours talking about how dysfunctional our government can be.  However, there are times when our representatives actually come together.  Passage of the CARES Act (the “Act”) was one of those times.

The Act was passed to directly address some of the challenges that arose due to Covid. Congress understood the potential impact on nonprofits, so there were provisions that were included to encourage giving.

There were two provisions worth noting: one for those giving smaller gifts and one for those giving larger gifts.

Smaller Gifts: Previously, charitable gifts could only be deducted if you itemized your deductions.  With the changes in the tax code a few years ago, the standard deduction was increased, resulting in a reduced ability for people to itemize.  To that end, for many there was not a tax incentive to give smaller amounts (we fully acknowledge that many donors want to provide support regardless of the tax implications).  To encourage giving this year, the Act provides for a tax deduction of up to $300 for cash contributions made in 2020 to qualifying organizations for those who do not itemize.  So, you have the ability to get a tax benefit regardless of whether or not you itemize.

Larger Gifts: There are many who itemize and many who give larger gifts.  The changes in the tax code a few years ago allowed for a charitable deduction of up to 60% of Adjusted Gross Income (AGI) for cash gifts.  Understanding the need of the nonprofits and the impact larger donors can have, the Act provides for a deduction of up to 100% of AGI for cash contributions to a qualifying organization.  For someone who typically gives large amounts, the increased deductibility provides a tremendous tax benefit and can encourage the acceleration of gifting to take advantage of the one-time increased limit.

The end of the year is approaching quickly, so the window to take advantage of the provisions of the Act is closing.  We are ready and able to assist you in assessing what type of gifting strategy might be appropriate given your situation.

If we do not speak, we hope you, your families and your associates have a wonderful holiday and a happy New Year!  I think we are all ready to say goodbye to 2020.