Jewish organizations are hoping they will benefit from the Hurricane Katrina Emergency Tax Relief Act of 2005, which allows donors to give large gifts to charity by the end of this year with substantial tax benefits.
Nonprofits expect to benefit by having some large donors make additional significant gifts that take advantage of the act.
Signed Sept. 23, the law applies only to cash gifts, and allows a donor to deduct an amount equal to 100 percent of his or her adjusted gross income. That is double the normal limit of 50 percent.
“Donors have an opportunity to re-position sooner than they would have thought possible in a very tax-advantageous way,” said Rick Zurow, associate director of the Jewish Community Foundation of the Greater East Bay.
The only catch is that the contributions must be in the form of cash.
“There’s an opportunity for them to have virtually no negative income tax,” Zurow continued. “Right now, if I were a donor with lots of capability, I would stop donating checks and stocks, and would give” from a fund where cash is stored, such as a retirement account.
An insert that went out to local donors to the Jewish National Fund in its year-end mailing says, “Maximize the benefit from your JNF contribution.”
According to Sherri Morr, regional director of the JNF, “We feel very strongly that Congress did this because of a fear that nonprofits in general may suffer by the fact that people who give to them are giving to Katrina victims.”
Both the S.F.-based Jewish Community Federation and Jewish Community Federation of the Greater East Bay are also contacting their major donors in an effort to educate them about the new tax benefit, which applies only to this year.
Lisa Gurwitch, director of gift planning for the Jewish Community Endowment Fund of the S.F.-based JCF, said several large gifts are definitely in the works as a result of the tax break.
In one case, it involves someone who had been thinking about endowing a particular program and deciding to do it now, rather than wait, because of the new tax advantages.
Gurwitch pointed out that since many of the JCEF’s larger donors give gifts of real estate or stock, the benefit does not apply to them.
On the other hand, JCEF representatives are also talking with financial advisors, lawyers and accountants in the community. Potential donors “need to talk to [them],” said Gurwitch, because the tax break “doesn’t apply to everyone. It’s only about cash gifts that exceed 50 percent of income.”