Our survey of 112 community foundations shows only a modest rise in charitable giving due to the new $300 “universal deduction” created by the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, The Act created a new $300 deduction from federal taxable income for donors who do not itemize on their tax return. Only 22% of the 112 community foundations surveyed indicated they had received a gift under this provision, while 68% thought they had not. An additional 10% did not know (as donations received may not indicate the donor was taking advantage of this new law).
Documentation of the new gifts remains uncertain. While the $300 universal deduction is not available for a gift to a donor advised fund, we found that only 5% of community foundations had changed the tax documentation to their donors. For those that had changed their gift receipts, here is typical language: “Thank you so much for your gift to the XYZ Fund. The XYZ Fund is a Donor Advised Fund, held at the Community Foundation.”
Are you required to change the tax receipt for a gift donation under the CARES Act? At this point, the answer is “No”, as the current official guidance from the IRS does not require a statement that the gift went to a donor advised fund. The Internal Revenue Service certainly has it’s hand full keeping their operations going during the pandemic, so it is no surprise that they have not released new guidance on changes to tax receipt documentation. Don’t be surprised, however, if at some point new documentation requirements are issued relative to gifts to donor advised funds.
