As we approach the end of the calendar year, I would like to offer a few observations for 2021 year-end giving and legislative changes that might impact fundraising efforts in 2022:
Last week, the tenth annual Giving Tuesday raised an estimated $2.7 billion from 35 million donors. This year’s success, which reflected a 6% increase in donors and a 9% increase in dollars compared to last year, is encouraging news for charities anticipating a boost in charitable giving during these last weeks of December.
Despite recent market volatility amid concerns around inflation and the Omicron COVID-19 variant, charitable gifts of appreciated securities remain an attractive and tax-efficient option for many donors.
It’s the final opportunity for donors to take advantage of certain charitable giving incentives of the CARES Act that were extended through the end of this year. Those who itemize deductions on their 2021 income tax returns can deduct cash gifts to qualified charities up to 100% of their income. Non-itemizers can deduct up to $300 in cash gifts to qualified charities; $600 for a couple filing jointly.
Qualified Charitable Distributions (QCDs)
For donors aged 70 ½ or older, QCDs remain a very attractive giving option.
Build Back Better
It’s unclear whether the Senate will finalize and vote on its version of the Build Back Better Act – the Biden administration’s major social and climate policy plan – before the Christmas recess. After months of negotiation over the provisions and cost of the bill, many of the proposed tax increases that would have impacted individuals – and potentially their charitable giving – were omitted from the House version of “BBB” that was passed on November 19. The legislation does include a 5% surtax on modified adjusted gross income (MAGI) over $10 million and an additional 3% tax on MAGI over $25 million, which is projected to affect only .02% of taxpayers. Since the surtax will be levied on modified adjusted gross income, those affected would not be able to mitigate their tax liability through charitable deductions.
Legislative Watch List
Although Build Back Better has been garnering most of the attention of late, I am continuing to follow other legislative proposals that could significantly impact donor advised funds (Accelerating Charitable Efforts or “ACE” Act) and charitable distributions from individual retirement accounts (Legacy IRA Act; Securing a Strong Retirement Act of 2021). Stay tuned for more updates in 2022.
Best holiday wishes to all! I look forward to connecting with you in the new year.