Local charities can benefit from law
Published 12:00 am Friday, December 9, 2005
Each year during the holiday season many people loosen their wallets to make donations to their favorite charities. This year, donations are far more enticing thanks to the new Katrina Emergency Tax Relief Act.
The act is geared toward helping victims of Hurricane Katrina, but all 501 C-3 charities qualify.
IRS media specialist for Alabama and Mississippi Dan Boone said the act provides a special window of opportunity by increasing the charitable deduction for cash gifts.
Email newsletter signup
“Typically, under law, individuals are allowed to make donations not exceeding 50 percent of their gross income,” Boone said. “The Katrina law removes this requirement through Dec. 31 and allows donations of up to 100 percent.”
The law states gifts can be made to any public charity except support organizations, donor advised funds, charitable remainder trusts or private foundations.
Donors who are 59 and a half years old can withdraw cash from their qualified retirement plans and get a 100 percent offsetting charitable contribution deduction for a cash gift to the public charity of their choice.
The window of opportunity, Boone said, is even larger for individual donations.
“The interesting thing about this law is that it does not have to be Katrina related for individuals,” Boone said. “It can be any organization that qualifies.”
For industries, donations do have to be Katrina related.
Among these organizations that qualify for individual donations, is the Demopolis City Schools Foundation. Jan McDonald, the foundation’s executive director, said this was a great opportunity for people to support their schools.
“What a great opportunity,” McDonald said. “It is a great chance for donors to stretch their charitable giving here in town.”
Earlier in the year, McDonald said, city schools enrolled hurricane evacuees and donations were needed to satisfy their need for books and other equipment.
“The Demopolis City Schools Foundation doesn’t directly serve Katrina victims,” McDonald said. “But those students who had to evacuate and are living here benefit from the grants we make to the schools.”
Harriet’s House, another local 501 C-3 organization, can also benefit from the new law. Susanna Naisbett, executive director, said they always take this into account when they receive donations.
“Anytime we receive a donation we send a letter acknowledging the gift,” Naisbett said. “This allows them to use it for tax purposes.”
Since the law came into effect on Sept. 23, Naisbett said they have seen their donations grow.
“We have most definitely benefited from this,” Naisbett said. “We have some individuals who make large contributions and this way, they can use it as a tax break.”
Those who wish to make a donation may send them to Harriet’s House, P.O. Box 569 in Demopolis or call 289-8988 to arrange a donation. To make donations for the Demopolis City Schools Foundation please call MacDonald at 289-2226.
Other organizations may qualify as well. Please call and inquire if you would like to make a donation to your favorite charity.