Push for Charity Aid Gains Steam With Proposed Tax Break

Chris Gaetano
Published Date:
Jun 15, 2020

Lawmakers in both parties are considering legislation that would expand the use of charitable deductions as a way to encourage more people to give to struggling aid organizations, said the Wall Street Journal. The bill, backed by senators including James Lankford (R.,-Okla.) and Jeanne Shaheen (D.-N.H.), would allow taxpayers to deduct up to one third of the standard deduction through charitable contributions, which, in 2020, would be $4,133 for single filers and $8,267 for joint filers. Taxpayers would be able to deduct these donations, even if they don’t itemize their deductions. The Journal noted that the proposal comes three years after the passage of the Tax Cuts and Jobs Act, which had the effect of severely reducing the number of people giving to charity, given the expanded standard deduction.

At the same time, charitable organizations have not only been pressing the wealthy to give more but also also lobbying Congress and state legislatures to require donor-advised funds to release money to charitable donations faster, according to Bloomberg. Donor-advised funds have rules on releasing money that critics have said makes them as much tax management tools as charitable ones. Those pushing for change said donor-advised funds should be releasing more money to charitable organizations that, given the pandemic, are in desperate need of funding, and some are even pushing for changes in the law that would require them to do so. Reformers have called for a charity stimulus whereby Congress would force such funds to give out at least 10 percent of their money annually. CPA Practice Advisor said that 72 percent of Americans polled would support such a measure. In addition, Bloomberg quoted a member of the California State Assembly, who said she’s looking into imposing stricter rules on donor-advised funds so that nonprofits can receive donations faster.

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