Nonprofit Blog - Standards for Excellence Institute
Promoting Excellence and Trust in the Nonprofit Sector
Find a Licensed Consultant    Find Accredited and Recognized Organization


New, Time Limited Above the Line Charitable Deduction for 2020 Underscores the Importance of Nonprofits Providing Gift Acknowledgements to Donors

The CARES Act provides that the new deduction cannot be used by itemizing taxpayers—these taxpayers are still permitted to take their charitable contributions “below the line” as itemized deductions. This new benefit is limited to $300 on both individual and joint returns, and only applies to tax year 2020.

This benefit underscores the important responsibility that nonprofits carry to ensure that their donors receive appropriate acknowledgements and receipts for their donations.  While it is not possible for every nonprofit to know whether each one of their donors is itemizing their taxes or taking the standard deduction, nonprofits have a responsibility to ensure that those who contribute to their missions receive appropriate documentation showing the charitable contributions made.

The Standards for Excellence program focuses on following best practices in your resource development and fundraising activities.  The Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector states that a nonprofit’s “resource development policies should be consistent with its mission, compatible with its organizational capacity, and respectful of the interests of donors, prospective donors, and others providing resources to the organization.”

Standards for Excellence learning materials feature resources and tools to help nonprofits who are preparing acknowledgements and receipts for their donors.  If you’d like more resources on how to write a policy to govern the acceptance of charitable gifts for your nonprofit or what statements are required in your fundraising receipts and acknowledgement, check out our Standards for Excellence educational resource packets Disclose It: A Charitable Nonprofit’s Guide to Disclosure Requirements and Fundraising, Solicitation and Acceptance of Gifts.

The full series of Standards for Excellence educational packets  include sample policies, tools and model procedures to help nonprofits achieve best practices in their governance and management. They can be accessed by contacting a licensed Standards for Excellence replication partner, one of the over 150 Standards for Excellence Licensed Consultants, or by becoming a member of the Standards for Excellence Institute.

We share our sincere wishes for your continued good health and patience as we all navigate these challenging and uncertain times.

[1] How is this different from the existing charitable deduction, what “line” is that, and why put this “deduction” above it?

To start - think of the basic steps that go into calculating your tax liability.  Conceptually these are:

  1. adding up gross income,
  2. applying adjustments (additions or subtractions) to gross income to yield adjusted gross income or “AGI”,
  3. deducting either “itemized” or the ”standard” deductions from AGI to determine net taxable income,
  4. calculating the tax due on the net taxable income,
  5. applying tax credits against that amount of liability,
  6. deducting taxes already withheld or paid to yield the amount of tax due.

The adjustments that reduce gross income in Step 2 to determine “AGI” are commonly referred to as “above the line,” as opposed to the deductions (including for charitable contributions) that occur after the AGI is calculated, that are considered to be “below the line.”*   In some tax situations, ”above the line” reductions to income can be more advantageous than ”below the line” itemized deductions, that are more often subject to caps or limitations.

[2] Urban Institute and Brookings Institution Tax Policy Center,,itemizing%20their%20deductions%20in%202018.

By Amy Coates Madsen | August 07, 2020 | Nonprofit
Share This Story, Choose Your Platform!

About the Author: Amy Coates Madsen

Amy Coates Madsen is the Director of the Standards for Excellence Institute, a national initiative to promote the highest standards of ethics and accountability in nonprofit governance, management, and operations, and to facilitate adherence to standards by all organizations. The Standards for Excellence Institute is a program of the Maryland Association of Nonprofit Organizations where Amy has served for more than twenty-two years. Amy is responsible for coordinating all aspects of the association’s comprehensive ethics and accountability program and efforts to replicate the program nationally. She serves as a frequent trainer and writer in the areas of board conduct, program evaluation, program replication, fundraising ethics, and nonprofit management. She has taught courses on nonprofit ethics and accountability at the Johns Hopkins Institute for Policy Studies Certificate Program on Nonprofit Management. She has held positions at the Trenton lobbying firm of the Princeton Public Affairs Group, and the Public Policy Liaison Unit at the world headquarters of Catholic Relief Services. Amy received her Master of Arts in Policy Studies degree from the Johns Hopkins University – Institute for Policy Studies in Baltimore, Maryland; and her Bachelors degree from the Virginia Polytechnic Institute and State University in Blacksburg, Virginia. Amy is a member of Phi Beta Kappa. Amy serves on the Internal Revenue Service Advisory Committee on Tax Exempt and Government Entities (ACT). Amy is a former member of the Disaster Action Team of the Central Maryland Chapter of the American Red Cross and is qualified to provide disaster preparedness training to children and adults. She has also served as the former President of Central Maryland CAN TOO and was a member of the Board of Trustees of the largest United Methodist Church in Baltimore City. She serves on the board of her children’s preschool PTA and is a volunteer with the Girl Scouts of Central Maryland. Amy is currently leading an effort to establish an endowment for the Virginia Tech University Honors Program.