The $ 2 trillion stimulus bill that Congress approved on Friday extends the charitable deduction to all taxpayers for one year, makes nonprofits eligible for federal loans that could be largely forgiven, and bolsters taxpayers. tax incentives for corporate donations, according to nonprofit analysts.
Currently, only people who itemize their taxes can claim charitable deductions. The stimulus bill will allow non-discounters to deduct up to $ 300 in cash donations for the 2020 tax year, according to an analysis of the legislation by the National Council of Associations.
According to Dean Zerbe, National Managing Director of AlliantGroup and former tax adviser to the Senate Finance Committee, donations to donor-advised fund accounts would not qualify for the non-itemized deduction.
Associations have long sought a “universal deduction”, especially since the 2017 tax law roughly doubled the standard deduction and sharply reduced the number of people who detail their taxes.
The Senate voted unanimously on Wednesday to adopt the bill. The House approved it in a voice vote on Friday, and President Trump signed it into law.
For those detailing, the bill raises the annual donation cap from 60 percent of adjusted gross income to 100 percent. For corporate charitable donations, the bill increases the annual limit from 10 to 25 percent of taxable income. The cap on the deductibility of corporate food donations would rise to 25 percent of taxable income, from the current 15 percent.
More help for non-profit organizations
Other provisions of the bill affecting charities, according to the National Council of Nonprofit Organizations and other sources:
- Nonprofits with 500 or fewer employees (counting all full-time and part-time employees equally) will be eligible for Small Business Administration loans of up to $ 10 million. Nonprofits are also eligible for accelerated loans of up to $ 1 million. The money should be used for payroll, including paid time off, as well as health insurance premiums, facility costs, and debt service.
- Nonprofits that keep their employees on the payroll from February 15 to June 30 could have their loans canceled, turning the loan into a grant.
- Under a previous version of the legislation, nonprofits could not access these loans if they were eligible for Medicaid payments. This limitation was removed from the final version of the bill.
- The bill creates a refundable payroll tax credit of up to $ 5,000 for each employee on payroll. To be eligible, a nonprofit organization must have experienced a decrease in revenue of at least 50% during the first quarter of 2020 compared to the first quarter of 2019. Credit is available quarterly until revenue. of the nonprofit exceed 80% of the same quarter in 2019. Nonprofits receiving SBA emergency loans are not eligible for these credits.
- The bill allocates an additional $ 10 billion to another SBA program, Economic Injury Disaster Loans, and waives creditworthiness requirements for all applicants, including nonprofits. Eligible people will be able to get checks for $ 10,000 within three days.
- Non-profit organizations that fund unemployment benefits themselves could be reimbursed up to half of the costs of benefits paid to their dismissed employees.
- The bill will provide $ 25 million for the Kennedy Center in Washington, DC and $ 75 million for the National Endowment for the Humanities, according to the Washington post.
- The bill includes $ 75 million for public media stations, according to America’s Public Television Stations, a nonprofit. Patrick Butler, CEO of the organization, noted that public television stations have “dramatically expanded distance learning services for millions of students whose schools have been closed due to the national emergency.”
Although advocates for nonprofits are calling for more federal help from charities than the bill provides, including a $ 60 billion in aid specifically for nonprofits, the legislation was widely approved in hopes of seeing more later, including the expansion of the universal deduction.
“There is a lot to celebrate in this deal, but still a lot of advocacy is needed,” said Tim Delaney, president and CEO of the National Council of Nonprofits, in an emailed statement.
“Additional funding resources will be absolutely critical in the coming months,” wrote Charlotte Haberaecker, CEO of Lutheran Services in America.
Independent Sector, a Washington-based nonprofit, said nonprofits should call on lawmakers and urge them to vote for the bill.