Thanks to the IRS, one of the only good things to come of the pandemic is no more. As part of the CARES Act, even if you took the standard tax deduction in 2020 & 2021, the IRS provided a deduction for up to $300 in cash donations. This small tax incentive encouraged middle-class citizens to give back during a time in which organizations and businesses needed more help than ever. For once, it was a positive step from a government agency about whom most of us have rather negative viewpoints. I wrote at the time that, while it’s a great step, the IRS needs to keep, and increase, the CARES Act’s $300 charitable deduction in years to come. Instead, it’s been scrapped entirely in 2022.  

The IRS can help normalize charitable spending

Donating money has always been a weak piece of my personal finance puzzle, and it’s too easy for me to come to the conclusion that it doesn’t fit at all. In the wealth accumulation phase of financial independence, I am a bit of a money hoarder (when I’m not losing it on speculative ventures). Even a small donation hurts, just as any non-routine spending does. Maybe (probably), I’m just an asshole. And maybe, by automating some donations like I do my investments, I can turn charitable giving into a habit that I don’t think twice about. But the fact of that matter is that I usually need a push in the right direction when it comes to giving money away. Otherwise I tend to use supporting local businesses (which is good!) as an excuse to avoiding other no-strings-attached donations.  

So, as a way of finding another scapegoat, I’m going to put the blame on the IRS’ shoulders for not having a program like this in place permanently. The IRS can and should continue to incentivize this type of charitable behavior. What’s more, they need to raise the amount of money eligible to be written off “above-the-line” for those who don’t itemize their taxes.

Even a $300 tax deduction goes a long way

Most of us aren’t going to give enough to itemize our taxes when the standard deduction hovers around $13,000. With no tax benefit, donating money to your favorite organizations comes with no personal gain whatsoever. Giving just to give? What gives!? Unless you count that warm and fuzzy feeling you get inside when you contribute to a good cause, or take into account the impact that even a small donation can have on a non-profit. But all that feel-good crap does nothing for your tax return!

By offering a tax deduction, charitable giving becomes a prudent financial move to lower your AGI. I need this now-removed incentive from the IRS. What’s more, if the IRS ups this to an even $1,000—still less than 10 percent of a standard deduction—I would be inclined to meet this threshold much as I am by 401k and Roth IRA contribution limits. Give me a number and I’ll reach it. I just need someone to hold me accountable, and nobody likes to butt their noses into other’s people’s business quite like the IRS. Therefore, it’s incumbent upon them to provide that accountability.

Should I be asking “What’s in it for me?” when donating to charity? Of course not. That really kind of defeats the purpose of the whole exercise. But I’ve come to grips with myself. I know who I am. And if the IRS can answer my question with a little tax incentive, my brain will tell me that it would be financially irresponsible not to donate to charity. Since Uncle Sam is paying for a portion of my donation, eventually, I’m getting a discount on that contribution.

Automating charitable deductions thanks to taxable motivation

If you’ve already given to charities this year, then join me in my campaign to blog bully the IRS into making this an annual deduction. And try to refrain from rubbing in your purity and goodness. Which is exactly what I’m about to do.

Selfish jerk that I am, I do now automate charitable contributions totaling $300 to various organizations since the IRS kicked me in the behind with a $300 tax credit. By no means has that been the norm for me, and future givers might need a similar financial motivator.

Where I’ve donated in the past

Here are three of those organizations that have me and the IRS to thank for a small amount of money this year:

Harry Chapin Foundation – I had been enjoying some music by Harry Chapin —one of the best singer/songwriters of all-time, who died way too young in a car accident in 1981. I decided that the least I could do for the entertainment was donate to the organization that bears his name. I must have been in a sentimental mood. Upon looking up the foundation, it’s slogan, “When in doubt, do something,” left me no alternative. It focuses on supporting other organizations that have demonstrated an ability to dramatically improve the livelihood of people by helping them to become self-sufficient. What that means, mostly, is educational and agricultural support, as Chapin had long advocated for such equitable and hunger-related causes.

IMPACT Bay Area – An organization I learned about by reading Gavin de Becker’s Gift of Fear—a very interesting book that I haven’t gotten around to finishing. IMPACT focuses on teaching self-defense in a safe and empowering environment, catering–but not limited to–women. Naturally, as I’m in the Bay Area, I gave to my local chapter. But other regional groups can be found here.

Make-A-Wish Greater Bay Area – Another national organization with a local Bay Area chapter, most people have heard of Make-A-Wish and are aware of the life-changing wishes they grant for children with critical illnesses. Even my cold black heart enjoys the laughter of children and seeing a smile on a kid’s face.

As for my future charitable giving, I’ll try to do better. But I can’t deny that I’m largely influenced by whether or not the IRS holds my feet to the fire and re-instates this component of the CARES Act moving forward. Your move, big government.