How Donors to Fiscally Sponsored Films Benefit from Covid-19 CARES Act

In Creating the CARES Act, Congress Gave Everyone the Opportunity to Be a Little More Charitable

by Richard Kaufman – Guest Contributor

In crafting a response to the disastrous economic impact caused by the Covid-19 crisis, Congress created the Coronavirus Aid, Relief, and Economic Security Act (known as the CARES Act).  Most of us are familiar now with its Emergency Small Business Loans, Paycheck Protection Program, and disaster loans.  (And most of us who applied for those are familiar with not getting a response to our applications)

Did you know the CARES Act also boosted tax incentives for charitable giving? 

CARES Act

Congress realized that the crashing economy needed help beyond what they could provide.  While millions have been thrown out of work, many others are still getting a paycheck working from home or at essential businesses.  And, there are others who need not worry about working.  So, they created a perk to get them to donate to charities.

The New Benefit for Donors

While charitable giving comes from the heart, there have always been tax incentives to encourage donations.  Recent changes in the tax law have made it more difficult to get a deduction for giving.  

Under the current tax law, if you itemize on your tax return, you can deduct donations to registered charities up to 60% of your adjusted gross income.  Most people, however, don’t itemize and claim the standard deduction.  Those who do this can’t deduct charitable contributions they make during the year.

But, now, as explained by in NPQ (Non-Profit Quarterly), the rules have changed temporarily under the CARES Act providing several benefits:

The stimulus bill also contains a one-time, above-the-line deduction for cash contributions of up to $300 made to certain qualifying charities. All taxpayers would be eligible to take the deduction, even people who use the standard deduction. The incentive applies to contributions made in 2020 and would be claimed on tax forms next year.

So, anyone, even if they itemize, can deduct up to $300 in charitable giving.

For the eight percent of individual taxpayers who itemize their deductions, the bill would suspend for 2020 the normal limit on deductions for contributions, ordinarily 50 percent of adjusted gross income (AGI) or 60 percent for cash.

This means that charitable contributions equaling up to 100% of your adjusted gross income are now deductible on your 2020 tax return if you itemize on it.

Of course, most people can’t afford to donate 100% of their income.  But those HNI’s (high net worth individuals) will now have greater reason to part with their savings in order to help good causes.

Finally, corporate donation limits were raised as well. 

For corporations, the limit on deductions for contributions, ordinarily 10 percent of AGI, is elevated to 25 percent for 2020.

What the CARES Act Means for Fiscally Sponsored Filmmakers

Having your film fiscally sponsored means your project has been accepted by a 501(c)3 non-profit, like From the Heart Productions, into their fiscal sponsorship program.  This allows those making donations to those films to get tax deductions for their donations. Just like they would for other donations to any other charitable foundations.

And, under this new bill, donors can give more, get larger deductions, and get deductions where previously one had not been possible.   This will make it easier for these filmmakers to continue to get funding and get funded faster.

Why Donate to a Fiscally Sponsored Film?

Films that are fiscally sponsored must fall under the mission statement of the non-profit under which they fundraise.  For films fiscally sponsored by From the Heart Productions, these are films that are unique and make a contribution to society.  They are important, life-changing films, by filmmakers with a passion for their work. 

As Carole Dean, President of From the Heart Productions, says “Film is one of the most important art forms and it takes the longest to create.”  These independent films take years to produce from conception, through pre-production, to finished product.  A gap in their funding might mean some filmmakers would need to give up their projects.  Especially, when they are under the weight of having to make a living right now as well.

What Fiscally Sponsored Filmmakers Should Do Right Now?

Make these changes in the tax law known to your potential investors.  Include it in your pitch and on your crowdfunding pages. 

Focus on going after large companies and wealthy individuals in 2020.  This offer by the government for these new tax deductions is good for this year only. 

Don’t miss this opportunity to make the most of it