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Tax-Wise Tips and Reminders for 2020 Year-End Charitable Giving

Tax-Wise Tips and Reminders for 2020 Year-End Charitable Giving

As the year's end approaches, the need for giving remains stronger than ever. Fortunately, the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) earlier this year provides several incentives for those inspired to help. As your local community foundation, DuPage Foundation is here to help you SEE MORE IMPACT from your giving.

DuPage Foundation is delighted to share some key charitable giving tips and reminders for 2020. Be sure to consult your tax and financial advisors as you finalize your plans and feel free to contact us if we can be of assistance. You can give directly through the DuPage Foundation website or contact any member of our Advancement Team for assistance via the main office line, at 630.665.5556, or using their direct contact information.

Staff will be on call through 5:00 p.m. on December 31 to help you—but remember: acting sooner is better. Gifts of certain types of appreciated assets require significant lead-time for completion and may not be possible if you wait too long to initiate action. 

Thanks for your continued confidence and trust. We wish you and yours peace, joy, and comfort this holiday season!

Important Donation Deadlines

Checks mailed to DuPage Foundation and your other favorite charities must be post-marked by Thursday, December 31, to be counted for tax purposes in 2020. Our mailing address is 3000 Woodcreek Dr., Ste. 310, Downers Grove, IL 60515-5408. Contributions to DuPage Foundation can also be made securely online through December 31 via your bank account or credit card.

Charitable gifts of low basis stock and other appreciated assets are excellent options to consider gifting and can potentially result in considerable savings for you on income and capital gains taxes. All stock transfers to the Foundation must also be completed by Thursday, December 31, to be counted for tax purposes for 2020. 

Gifts of other appreciated assets such as mutual funds, real estate, closely-held business interests, insurance, alternative investments, etc., will be evaluated by the Foundation on a case-by-case basis but cannot be guaranteed to be completed by year-end after Monday, November 30. Start initiating these gifts now to allow adequate time for their review and processing. 

In summary:

  • By November 30, 2020 - Begin process for donating more complex gifts such as appreciated assets, business interests, insurance, etc.
     
  • By December 31, 2020 - All charitable contributions (checks, credit card contributions, stock gifts, etc.) must be post marked or delivered

CARES ACT Incentives

Standard Deduction Households: 

Taxpayers taking the standard deduction may deduct up to $300 per filing household for cash charitable contributions made to qualified 501(c)(3) charities during 2020, excluding donor-advised funds, private foundations and supporting organizations.

Itemizing Households:

  • Cash – Through 2020, donors may deduct up to 100% of their Adjusted Gross Income (AGI) for cash charitable contributions to qualifying 501(c)(3) charities, excluding donor-advised funds, private foundations and supporting organizations. The deduction rules for contributions to these “non-qualified” charitable vehicles remain unchanged.
     
  • Appreciated Assets – Contributions of appreciated assets held for a year or more (stocks, mutual funds, real estate, closely-held business interests, etc.) to qualified charities, donor-advised funds and supporting organizations remain limited to a deduction of up to 30% of donors’ AGI. Contributions of such assets to private foundations remain capped at 20 percent. 

Utilizing a combination of these options, itemizing taxpayers can deduct up to 100% of their 2020 AGI via charitable gifts. Those who make this 100% of AGI election can also carry forward unused qualified cash gift deductions up to five years. The carryforward will be subject to the normal 60% of AGI limit, as will cash deductions carried forward from past years. A five-year carryforward also exists for unused qualified gift deductions of long-term appreciated assets up to their regular limits.

Corporate Gifts:

For corporations, during 2020, the 10% gross income-based limitation has been increased to 25% for charitable contributions made in cash to qualifying 501(c)(3) charities, excluding donor-advised funds, private foundations and supporting organizations.

Qualified Charitable Distributions (QCDs)

The CARES Act has suspended Required Minimum Distributions (RMDs) for 2020. However, donors age 70½ and older can still make Qualified Charitable Distributions (QCDs) from traditional and other types of IRAs to qualified charities (excluding donor-advised funds, private foundations and supporting organizations). The limit on these donations remains $100,000 per individual or $200,000 per married couple. 

Per the new rules on QCDs established under the SECURE Act in late 2019, deductible contributions made by donors 70½ and older to their IRAs will reduce their QCD limit in kind by the amount of the contribution for the year it is made. 
 
Opportunity for IRA Owners 59½ - 70½ – Under the CARES Act, itemizing donors of all ages may choose to deduct up to 100% of their AGI for cash charitable contributions during 2020. This provides donors ages 59½ to 70½ with a tax benefit similar to a QCD. They can elect a cash distribution from their IRA, contribute it to charity, and potentially offset any tax consequences from the distribution by taking a charitable deduction in an amount up to 100% of their AGI.

Donor-Advised Funds

Donor-Advised Funds (DAFs) are perfect for people looking for a year-end tax deduction but who want the flexibility to give to charities later. The donors make a tax-deductible gift to a host charity—such as DuPage Foundation—and open a DAF. The host charity then owns and invests the DAF’s assets and the donors (or advisors whom the donors name) recommend grants to qualified charities over time. Further contributions can be added as desired or when prudent.

Local Support Through Unrestricted, Field-of-Interest and Designated Funds

Year-end gifts to DuPage Foundation's unrestricted DuPage Forever Fund and various field-of-interest and designated funds are also critical to fueling our impact locally. Your investment in these types of funds ensures the Foundation has the resources to respond effectively to the changing needs of our community, together, through coordinated impact, and that your favorite causes are endowed for the future.

Whether you want to benefit all types of area not-for-profits through our Community Needs grant program or focus your support toward one or more causes or organizations, we can help! 

Foundation Initiatives

As DuPage County's philanthropic leader, DuPage Foundation strives to be a catalyst for initiatives that will help improve and enrich the quality of life for all DuPage residents and ensure that our community remains a thriving place to live, work and play. 

Your year-end support of our Bright & Early DuPage Initiative will help ensure that DuPage children, from birth to age 5, have the resources they need to succeed in kindergarten and throughout life. 

You can also help DuPage Foundation advocate for and support our local arts community with a gift to our Arts DuPage Initiative. DuPage County’s vibrant arts sector has taken a devastating hit in 2020 as a result of the COVID-19 pandemic, but the Foundation is committed to advocating for their endurance and recovery with your support.

The content provided above and throughout this website is for informational purposes only and should not be construed as or relied upon as legal or tax advice. DuPage Foundation does not provide legal or tax advice and recommends that you consult with your tax attorney and other members of your professional advisor team before proceeding with a liquidation, dissolution or termination of a private foundation or any other charitable gift.