The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, and extended financial aid to for-profit and nonprofit businesses affected by the COVID-19 pandemic. Among the Paycheck Protection Program and Emergency EIDL Grants, the legislation also extended tax deductions for charitable giving.
Specifically, for the entire year of 2020, the limitation on how much of your charitable donations you can deduct against your income, no matter who you are or how much you give, has been lifted. Previously, it was a maximum of 60% for cash donations and 50% for non-cash contributions.
Under the CARES Act, these limitations have been removed for federal income tax purposes. Additionally, anyone who donates up to $300, whether they itemize or not, can deduct that against other income for donations in 2020 (considered an “Above the Line” deduction).
This presents a massive marketing opportunity for your nonprofit that can help drive donations from major donors, small donors, third-party donors who give to their friends’ or family’s personal fundraising pages, and recurring donors. It’s especially relevant with Giving Tuesday and year-end on the horizon.
However, your nonprofit needs to frame this tax deduction so that isn’t insensitive to your beneficiaries and doesn’t pander to supporters. You must fold this information into your fundraising marketing messages in a way that feels organic and doesn’t turn supporters off to donating.
Below, we’ll provide four quick email templates that can help your nonprofit market this tax deduction successfully. First, let’s explore CARES Act charitable contributions and the nature of the tax deduction a bit further.
Understanding the Deduction
Simply put, under the CARES Act a taxpayer can donate 100% of their adjusted gross income (AGI) and take a tax deduction for it. We consulted Jordan Keller from Dark Horse CPA to help us break this down. Jordan has broad experience across many industries in both accounting and tax and has deep knowledge of the following industries: real estate, healthcare, nonprofit, retail and eCommerce, construction, and manufacturing.
There are two main facets to this deduction.
Universal Deduction for Donations Up to $300
For people who no longer itemize their charitable giving, the CARES Act will allow these individual taxpayers to deduct donations to charity of up to $300 on their 2020 federal tax return, even though they take the standard deduction. Contributions to donor-advised funds or giving accounts is still the old limit of 60%.
Raising the Charitable Giving Deduction Cap
For donors who itemize their deductions, and therefore directly write off gifts to charity, the current deduction cap is 60% of adjusted gross income (AGI). The 60% of AGI limit is for giving to 501(c)(3) public charities.
The deductibility of gifts to 501(c)(3) private foundations is capped at 30% and was not included in this legislation. Corporations are able to deduct charitable donations up to 10% of taxable income as well. The CARES Act lifts these caps to 100% for individuals and joint filers, while corporations will see their cap lifted to 25% for 2020.
“These are truly substantial changes to the tax treatment of donations. For individuals, it could theoretically mean zero taxable income if they give big. For example, if John Taxpayer has an AGI of $175,000, he would normally be able deduct up to $105,000 for gifts to charity. With the temporary changes in the CARES Act, John could now deduct up to his full AGI of $175,000 if he gives that much to charity in 2020. The math works the same way for corporations.”
Your Marketing Opportunity
The incentive for donors is clear: almost any taxpayers who make charitable contributions for the rest of 2020 should receive some tax benefit under the CARES Act legislation. Your organization can market this tax deduction opportunity to donors to incentivize giving.
However, you must strike a fragile balance between being too heavy-handed and not clear enough about the eligibility. Email will be the most effective channel through which you can market the CARES Act tax deduction for the 2020 year-end fundraising season.
Not only do emails allow you to find that balance by providing enough space for context and copy that showcases your main appeal while also highlighting the tax benefits, but you can also segment, target, and personalize your outreach to different donor demographics for maximum effect.
For example, we know that donors of all levels can benefit from the tax deduction. The language you use for small donors who give $20 or less, however, will be different from the language you use for those of higher gift levels and your actual major donors.
No matter how you segment your lists, don’t make the tax deduction the central part of your email. Instead, surface the tax deduction as a pro tip, frame it as a question, or focus on what it means if someone gives a certain amount:
- Did you know that your gift is eligible for a 100% tax deduction under the CARES Act legislation?
- PRO TIP: Individuals and joint filers who itemize their deductions can deduct 100% of their adjusted gross income for the rest of 2020.
- You’ve given $150 to us already in 2020. If you give $150 more before the year is over, you can write off 100% of your $300 total.
Take what you know about the CARES Act charitable contributions and tax deduction legislation and apply it creatively to your marketing emails, folding the information in alongside impact showcases, fundraising appeals, and inspiring milestones. To help, we’ve created four quick email templates to get your wheels turning for Giving Tuesday and year-end.
6 Weeks Prior to Giving Tuesday
We’re six weeks out from Giving Tuesday, and our campaign is officially up and running! This year has been challenging for everyone, and our organization needs your help more than ever.
Your gift will be put to use immediately to prepare, package, and deliver hot meals for our community. This effort will be ongoing throughout the entire holiday season and into January, so the earlier you donate, the more we can accomplish.
And did you know that, for the remainder of this year, any gift you make is eligible for a 100% tax deduction under the CARES Act legislation?
Don’t wait until Giving Tuesday—take action today! [LINK]
The Week Leading Up to Giving Tuesday
We’ve already delivered over 1,500 meals to families in need, and we have no intention of slowing down anytime soon, especially with Giving Tuesday just days away.
Take action right now to help us crush our goal of $50,000 raised and 5,000 meals delivered! [LINK]
You’ve already donated $150 to our organization this year, and we’re eternally grateful for your help. Did you know that if you donate another $150, though, your full $300 amount given this year is eligible for a 100% tax deduction under the CARES Act?
There has never been a more important time to step up and help the world—we’re counting on you!
Day-Of Giving Tuesday
It’s officially Giving Tuesday, and we’re expecting to surpass our initial goal of $50,000 raised and 5,000 meals delivered. That’s why we’ve decided to extend our goal to $75,000 raised and 7,500 meals delivered!
Go above and beyond for families in need this holiday season. [LINK]
Don’t forget: your charitable contributions made for the rest of the year are eligible for a 100% tax deduction under the CARES Act legislation.
Let’s see just how much of an impact we can make together today and through the end of the year.
We were able to raise $100,000 on Giving Tuesday and secure 10,000 meal deliveries as a result of our supporters’ dedication. And while Giving Tuesday might be over, we’re gearing up for an even bigger year-end.
Not only will we continue our meal delivery program into the first weeks of January, we’ll be increasing our goal to $200,000 and 20,000 meals delivered!
With your help, we’re confident we can hit this goal. Make a donation today. [LINK]
Plus, any charitable contributions you make for the rest of the year is eligible for a 100% tax deduction under the CARES Act legislation. That means you can support our meal delivery program through the end of this year at virtually no cost!
Let’s do this!
These email templates are examples to show how you can start communicating the opportunity about the tax deduction to increase Giving Tuesday and year-end fundraising revenue. Make sure you speak with your legal team, tax representatives, or financial experts to ensure you’re going about it the right way.
You can also build this marketing strategy into your larger email marketing strategy around Giving Tuesday and year-end. For more, be sure to explore our library of other free email templates, from Giving Tuesday-specific communications to year-round donor retention efforts:
- 10 Giving Tuesday Email Templates
- 16 Email Templates for Giving Tuesday Through Year-End
- 13 Donor Retention Email Templates
- 8 Email Templates to Upgrade Your Recurring Donors
- 9 Email Templates for Nonprofit Annual Communication Plan
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