Tax-deductible contributions: Learning along the way

I’ve been directing small nonprofits for 25 years, and I’m finally accepting the reality that fundraising is an essential aspect of the work of a small nonprofit’s executive director.

This is a bark and bite thing. The bite is not so bad, in large part because Animal Help Now offers popular and effective services on a shoestring budget.

Like you, I imagine, I’m seeing a lot of year-end appeals for funding, most of them mentioning CARES Act provisions dealing with contributions to nonprofit organizations. Having never really fully understood tax deduction, I was compelled to reach out to a CPA friend for guidance on this. I am compelled to understand taxes as they relate to Animal Help Now and our supporters, because I need every angle I can get to make a honest and compelling case for donations to our lifesaving nonprofit.

With that, here’s where I am today. Many of you will find nothing new in these paragraphs; they’re written more for people like me who are confused about the whole charitable tax deduction thing.

Donations made to nonprofit 501(c)3 organizations such as Animal Help Now may be tax deductible, meaning under certain circumstances the amount of the donation – or some percentage of that amount – can be subtracted from your taxable gross income. These deductions are not available to taxpayers who take a standard deduction (i.e., those who do not itemize).

The CARES Act has changed things a bit for 2020. Taxpayers who take a standard deduction may take an additional amount of up to $300 for qualifying contributions made to nonprofit 501(c)3 organizations. Taxpayers who itemize deductions may deduct contributions made to nonprofit 501(c)3 organizations up to 100% of adjusted gross income. (versus the standard 60%).

Donating to nonprofits never saves a person money under standard methods of accounting, but smart giving certainly can stretch the good you do with your donor dollars. Please see your tax adviser for specific guidance on how to make the most of your charitable contributions.

Be smart out there! And safe!

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