The impact of COVID-19 has tested our society in new ways. Whether it’s working from home with your spouse and children (and also serving as their teacher), having the sale of your business put on hold, filing for unemployment for the first time in your 40-year career, or being told by your adult children that you can’t see your grandchildren, this pandemic is unlike anything most of us have experienced in our lifetimes. It’s affecting our economy and future financial security, our relationships with family, friends, and colleagues, and even our mental health as we navigate the realities of social distancing.
Philanthropy during COVID-19
While discussions about the markets and delayed tax filings are ever-present with our clients, we’re also having conversations about how they can help their communities. If you’re feeling that call, be sure you answer it in a way that’s genuine and aligns with your values. That’s what Dug and Linh Song are doing with the Song Foundation in Ann Arbor, Mich. Dug Song, president at The Song Foundation said, "Having worked in kitchens and restaurants in Ann Arbor over the years, my wife Linh and I know how critical these local businesses and jobs are in our community. We need small business employment to continue to be the backbone of economic opportunity. Small businesses are critical to our region and provide meaningful jobs that support our local community. We value these independent businesses that make Washtenaw County stand out as a unique place to live and work."
Through their foundation, the Songs have committed to deploy $1 million in small business grants to businesses in need in Washtenaw County. They’ve collaborated with their local economic development agency and Ann Arbor SPARK to launch a program in less than 10 days. Despite the foundation being less than a year old — and not having had accounted for a global pandemic in 2020 — the Songs recognized the need and felt compelled to act.
We’re hearing stories on social media and from friends and family about random and simple acts of kindness. Your contribution might be picking up groceries for an elderly neighbor, donating blood, or helping with the childcare needs of a friend who is still going to work each day. Not all forms of generosity result in a tax deduction, but they do show our love for one another.
Guidance on how to give now instead of at year-end
In addition to those small gestures that brighten our days, we’re helping clients identify the best ways to leverage their donor-advised funds (DAFs), private foundations, outright gifts, and event-qualified charitable distributions (that usually come at year-end). These clients are seeking guidance on how to identify the right charities locally, nationally, and even internationally to support. We’re also helping them get comfortable with the idea of giving right now instead of at year-end.
We recently worked with a family that completed a grant-making cycle in early March. The five directors got back together for a video call at the end of the month and agreed to use future funding for a COVID-19 response fund. This family gave themselves permission to provide funding outside of their usual giving preferences and time frames. While the grant didn’t align with the mission, it did align with their core values.
Beyond more formal giving, we’re seeing parents and grandparents use this time as a teachable moment. One client gathered their family together (virtually) and said that they’d match any funds given by kids and grandkids to pandemic-related causes. They’re planning another virtual family gathering at the end of the month to share more about the causes and organizations being supported.
We’ve only scratched the surface on the ways our clients are making a difference. As we continue to have these discussions, here are few things we're telling our philanthropic clients:
- Consider the immediate needs of organizations and causes and provide support for general operating needs instead of mandating specific programs.
- Reach out to organizations for which you consider yourself to be a major funder to determine their greatest need and your capacity to help.
- Watch out for scams and newly formed organizations — not everyone’s intentions are good.
- Consider supporting a response fund created at a community foundation as an easy and direct way to support the needs of those dealing directly with the impact of COVID-19.
Finally, the CARES Act has created financial incentives for individuals giving to 501(c)(3) public charities. For those individuals taking the standard deduction, you can claim up to $300 per tax-filing unit (i.e., married couples filing jointly and single filers both get the same $300 deduction) in cash contributions to a qualified 501(c)(3) on your 2020 tax return. For those itemizing, the charitable deduction for cash contributions to qualified 501(c)(3) has been increased from 60 to 100% of your AGI for 2020. Contributions to DAFs and supporting organizations are disallowed.
The impact of COVID-19 is unprecedented in our history, so it’s a good thing to do something outside of the norm if you’re feeling compelled to do so. With that being said, when clients ask for our advice, we remind them that any significant philanthropic commitment needs to be made within the context of their overall financial and estate plan.
Remember — philanthropy comes from the Greek word “philos anthropos,” which means love of thy fellow man. If that sentiment is top of mind for you and your family, as it for so many right now, we’re here to answer any questions.
