Arizona residents and taxpayers receiving a stimulus check in the wake of the COVID crisis are increasingly indicating that they will be seeking to donate these funds to nonprofits. Charity Navigator, which evaluates and rates nonprofits, has seen a correlation between stimulus checks and an increase in charitable giving.

“We are hearing that many people are interested in donating their stimulus checks to Arizona nonprofits because they may not need the money themselves at this time,” said Kristen Merrifield, CEO at the Alliance of Arizona Nonprofits. “Given the financial impact this pandemic has had across the sector and the economy, we are excited to witness the willingness of individuals to try to help those in need in our communities. We want to provide general guidance for those making this decision with their stimulus checks.”

One such donor, who did not wish to be named, generously gave to ten different organizations on April 7 using her stimulus check funds. They said, “I gave away my stimulus check because they (nonprofits) needed it more than I did.”

The Alliance of Arizona Nonprofits has developed 5 Guiding Principles for those wishing to donate their stimulus funds.

1. Use AZGivesDay.org, Charity Navigator and Guidestar.
Use online tools to find, research and vet who you give to.
“Before making a donation, vetting the organization you’re about to support ensures its credibility and provides comfort in knowing the money will be directed where it’s needed most,” says Merrifield.

2. Make your gift for general operating support rather than a specific program.

This allows the organization's leaders to decide how to use the money themselves. “Nonprofit leaders and their management teams understand how best to allocate funds donated to them,” said Jennifer Purcell, VP of Community Engagement at the Alliance of Arizona Nonprofits. “They are then able to use these dollars where it will be the most impactful for the organization and those they serve.”

3. Tax Ramifications: There may be tax ramifications to consider and you should consult your financial advisor if you have questions.

“Your tax advisor can assist you in confirming the selected organization is a public charity and the benefit to your tax situation based on your circumstances. The stimulus payment is not taxable income to you” says Carolyn Sechler of Sechler Moran CPAs. “Individuals can elect to deduct cash contributions, up to 100% of their 2020 adjusted gross income, on itemized 2020 tax returns.

“The new deduction available for 2020 as part of the CARES Act is only for cash gifts up to $300 per taxpayer ($600 for couples) that go to a public charity, not a private foundation,” says Sechler. This is particularly beneficial to taxpayers who take the standard deduction when filing their taxes (in other words for taxpayers who do not itemize their deductions).

Charities and nonprofits should make it clear whether they qualify as a charitable organization, making it possible for donors to claim a tax deduction. Contributions and gifts to individuals are never tax-deductible.

4. Giving Locally: Local Funds Can Make a Big Impact.
Arizona’s nonprofits are losing revenue at an astonishing pace according to a recent poll by the Alliance. This week, the Alliance received 306 responses to its updated Covid-19 Nonprofit Impact Pulse Poll, and it is reporting 98% of responding organizations have been impacted significantly by the COVID-19 crisis. 86% of those impacted report decreased revenue, and 76% indicate a disruption of services to clients and communities. Total revenue loss reported thus far in Arizona is nearly $40M. The anticipated loss through then end of the respondents’ fiscal year is nearly $433M. These findings are current as of May 4, 2020.

5. Keep a Record. You may receive a letter or email of acknowledgment from the charity you donate to, and it’s important to keep that transactional record. Keep records allowing you to see how the donation was made (cash/check/credit card), and be sure to make sure the statements note if you received any goods or services in exchange for the donation, and their value.

By Steve Carr