A wide range of sectors is hurting and asking for help from the U.S. government, including Indiana nonprofits.
The $2 trillion federal coronavirus relief bill approved by the U.S. Senate late Wednesday provides some assistance to those groups by including a provision for charitable deductions.
The measure in the relief bill grants taxpayers an above-the-line deduction for up to $300 in charitable donations starting in 2020.
In an interview with Inside INdiana Business, Indiana Philanthropy Alliance Chief Executive Officer Claudia Cummings is encouraging people to take advantage of the deduction.
“I really do encourage everyone to make a charitable contribution to their local basic needs service providers as quickly as they can so that we can get the relief out to those who need it most,” said Cummings.
To encourage donations, charities asked Congress to create a universal charitable deduction that taxpayers can claim even if they don’t itemize their deductions.
If the House of Representatives approves the bill, taxpayers will be able to claim the break when they file their 2020 return next spring.
When the federal tax overhaul went into effect in 2018, millions of people lost the tax benefit.
“Under the tax cut act, as part of that process, the itemization threshold was increased, so this will allow those who do not itemize to also receive a charitable tax deduction,” said Cummings.
The IPA is a statewide network of foundations and philanthropic organizations that gives members guidance as they award grants.
Cummings says the awards often involve a long, drawn-out process, involving massive amounts of paperwork for special projects. But since the onset of the pandemic, things have changed in the nonprofit world.
“It’s about basic needs, including everything from food, clothing, shelter. Those are the areas that are most in need,” said Cummings. “The funds are sorely needed to respond to the incredibly huge unemployment rate.”
On Thursday, the U.S. Department of Labor revealed nearly 3.3 million Americans filed unemployment claims last week.
Cummings said another issue facing nonprofit foundations is the economic impact on their endowments. Foundations rely on investments in the endowments to generate revenue, but they have taken a hit as the stock market plummeted.
“At a time when we need charitable institutions the most, their endowments are down at just as much as your 401k,” explained Cummings.
She says foundation executives must be good stewards of the funds, but they also realize the demand is great.
“I’m hearing time and time again, where they’re choosing to make the tough choice and say we have to help we have to jump in.”
Click here to learn more about IPA’s COVID-19 response and frontline organizations providing relief.
Cummings explains to Inside INdiana Business how the crisis is impacting foundation endowments.
Cummings explains how one Muncie-based foundation is expediting its grant process.