A Guide to Year-End Giving

by | Nov 16, 2020 | News

As a local expert on philanthropy and community programs, the Community Foundation is here to help you maximize your charitable giving. If you have any questions about making a contribution or starting a fund, please contact Foundation staff.

CARES ACT TAX INCENTIVES FOR 2020

Generally, only those who itemize deductions may deduct charitable contributions. In 2020, individuals not itemizing deductions may take a charitable deduction of up to $300 per individual. For those who itemize, individuals may deduct qualified contributions of up to 100% of adjusted gross income (temporary suspension of 60% rule). Corporations  (C Corporations) can deduct qualified contributions up to 25% of taxable income. Notably, contributions to Donor Advised Funds do not qualify for these benefits.

CONTRIBUTING TO A DONOR ADVISED FUND

A higher standard charitable deduction threshold was implemented in 2017. To itemize deductions, the total deduction must exceed $12,400 for an individual (up from $6,350) or $24,800 for a married couple (up from $12,700). To take advantage of higher deductions, use a Donor Advised Fund (DAF) to condense several years of charitable giving into 2020 and gain the maximum tax benefit allowed.

USING YOUR IRA RMD TO MAKE CHARITABLE CONTRIBUTIONS

Generally, if you are 72, you must take Required Minimum Distributions (RMDs) from your Individual Retirement Account (IRA). These “Qualified Charitable Distributions” (QCDs) may be made tax-free if directed to a nonprofit organization like CFNLA. The CARES Act enabled any tax payer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70½ in 2019 and would have had to take the first RMD by April 1, 2020. See IRS Notice 2020-51.  Notably, QCDs may not be made to a Donor Advised Fund.

SPECIAL OPPORTUNITY! CFNLA’s EARLY CHILDHOOD EDUCATION FUND

Did you know 90% of brain development occurs from age 0 to age 5? According to the Center on the Developing Child at Harvard University, a child’s experiences during the earliest years of life have a lasting impact on the architecture of the developing brain.

The Louisiana Childcare Assistance Program, or CCAP, provides financial assistance to low-income families (while parents are working or attending school) for high quality childcare. In the fall of 2019 in Caddo Parish there were 842 children enrolled with 188 on the waiting list.

According to the most recent Louisiana Department of Education data, 59% of children in both Caddo and Bossier Parishes were not kindergarten ready. The Louisiana Legislature established the Early Childhood Education Fund to match non-state, non-federal (local, private) funds spent on quality early care and for centers participating in the quality rating system or those eligible to receive CCAP-funded students. The state fund will provide a dollar-for-dollar match for every local dollar raised.

Because all children deserve equal access to quality early education and care, CFNLA challenges Caddo Parish citizens and businesses to raise $900,000 to fund spaces for Caddo children on the CCAP waitlist. If this goal is met, CFNLA will contribute $100,000 to total $1 million! Please consider a donation to CFNLA’s Early Childhood Education Fund so we can leverage state matching dollars so many more children ages 0 to 5 have access to quality early education. As a designated fund rather than a DAF, this fund enables donors to give from their IRAs and to qualify for CARES Act tax incentives.

INTERESTED IN MAKING A CONTRIBUTION OR STARTING A FUND?

CFNLA accepts cash, securities, property, and a variety of other assets. We will work with you to make sure your contributions are received by the year’s end. To make a contribution or start a fund, contact CFNLA at 318-221-0582. For specific tax questions, please contact your personal tax advisor.