The 2020 CARES Act - At a Glance

Apr 28, 2020

Overview

The CARES Act (H.R. 748), signed into law on March 27, is a $2 Trillion economic stimulus package intended to provide limited relief to individuals, industries, businesses, states and localities affected by COVID-19. It is “Phase 3” of bills passed by Congress to respond to the pandemic following the Families First Coronavirus Response Act, which included policies to improve Supplemental Nutrition Assistance Program (SNAP) access temporarily. Even though the CARES Act is the largest economic stimulus package in our country’s history, more federal action will be needed to assist impacted populations, such as CEO participants, and to establish a pathway back from the economic devastation resulting from COVID-19.

CARES Act Funds for States and Localities

Every spring, state legislatures convene to pass a balanced budget for the next fiscal year based on current revenue and anticipated costs. COVID-19 has impacted states and localities mightily in unanticipated costs for assisting sick constituents, protecting essential workers, standing up a never-seen-before medical response, rescuing businesses, providing unemployment payments for laid off workers, housing the homeless, and other emergency response needs. Between these costs and delayed, and likely reduced, tax revenue, states are struggling to find funds to meet basic needs of their residents.

The CARES Act attempted to address the inevitable deficits in state budgets by a number of provisions including:

  • $150B for FY2020 for direct payments to States, Tribal governments, and units of local government;
  • $6B for Community Development Block Grants which fund a wide range of poverty alleviation and community development projects in cities.
  • $345M in Dislocated Worker Grants;
  • $35B for food assistance, including nearly $16B for SNAP, the nation’s largest program for hunger response; and $8.8 billion for Child Nutrition Programs
  • Funds for programs for low-income families and children, including $4B related to assisting with homelessness
  • Limited access to a $500B loan Fund administered by the Treasury Department to assist mid-sized businesses
  • $30B for schools colleges and universities

CEO is reaching out to states and local partners to see how our work crew services could assist with state and local response to COVID-19, while providing employment and vocation training to a justice impacted population.

Implications for Individual Donors

  • Charitable Deductions (Sections 2204-2205)
    • Standard Deduction: Tax payers are permitted to take a tax deduction for contributions made to qualifying nonprofit organizations up to $300 ($600 for a married couple). This benefit is a permanent charitable deduction that will be made available to all taxpayers who select a Standard Deduction in 2020 and beyond. A donation to a Donor Advised Fund does not qualify for this deduction.
    • Itemized Deduction: Tax payers are permitted to take a tax deduction of up to 100% of your Adjusted Gross Income (AGI) for contributions made to qualifying nonprofit organizations. The law relaxes the limitations placed on charitable giving (from 60% of a taxpayer's AGI to 100%).

Implications for Corporate Donors

  • Charitable Deductions: Under the CARES Act, corporations that opt to itemize their deductions, will be eligible to deduct a larger percentage of their contributions. While in the past, corporations were limited to a 10% deduction on their taxable income, they may now deduct up to 25% of taxable income for cash gifts that are made to qualifying nonprofit and charitable organizations. This new deduction does not apply to donations to private foundations or Donor Advised Funds (DAFs).

The CARES Act Stimulus & CEO Participants

The CARES Act provided a direct payment to citizens in the form of a tax rebate. Individuals who make $75,000 or less in income receive $1,200, and the benefit reduces by 5% until it zeros out for those individuals making more than $99,000. Citizens are eligible for an additional $500 per child. Returning citizens qualify for the rebate, but there may be difficulty in obtaining the benefit for individuals who have not filed a recent tax return. Additionally, creditors may be able to garnish the funds for debt owed, making it difficult for the money to help those justice-involved individuals burdened by debt.

Much more targeted federal action is needed to ensure returning citizens are able to connect with jobs, and receive the career pathway opportunities and training necessary to support themselves and their families.