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With Tax Break About To End, Congress Puzzled Over How To Encourage People To Give

AILSA CHANG, HOST:

The holidays are always a critical time for nonprofits. But during the pandemic, they're even more significant. Finances are strained, and the demand for services is high. Earlier this year, Congress passed a little-noticed tax break to encourage people to give more in 2020. Well, that break looks like it's going to expire at the end of the year, leaving Congress to rethink how to boost charitable giving as the coronavirus rages. NPR congressional correspondent Kelsey Snell has this report.

KELSEY SNELL, BYLINE: Tucked away in the nearly 250-page CARES Act is a tax deduction of up to $300 for nearly every person who gives to charity this year. Republican Senator James Lankford worked on that provision because he says individuals support those charities already, and they need some support to make sure the giving keeps going.

JAMES LANKFORD: We need to incentivize people to not forget those not-for-profits. And we can't really direct that from the federal government.

SNELL: So they came up with a tax break to make sure more people can write off what they donate when they file their taxes. They were sort of undoing a change that they made a few years ago. The tax code rewrite Congress approved in 2017 made it so fewer people can get the old charitable break. Fewer people are itemizing deductions now, and that's the only way to claim that credit. Congress wanted to make sure everyone had an incentive to donate even a little in this exceptionally tumultuous year.

LANKFORD: If our not-for-profits fail during this time period, if they're not getting the support they need to go help others, there's no way government can keep up with that.

SNELL: This break came together quickly when Congress was rushing to pass an aid package in March. The bipartisan group working on charitable donations say it wasn't perfect. Some say it wasn't big enough. Some say they need to do more to make sure charities use those donations to help people directly, not pay for administrative costs. Gene Steuerle, the co-founder of the nonpartisan Tax Policy Center, says another big issue is the bottom line. The tax is expected to cost the government about $1.5 billion.

GENE STEUERLE: And it led to probably an increase in charitable giving of about $100 million. So maybe a few people paid more, but not very many.

SNELL: So the return on investment - it could have been better. Lankford and others working on the credit say they're considering lots of ways to give people incentives to continue giving this year, like maybe doubling the credit for individuals or rethinking how the credit is structured entirely. It's something they plan to return to in 2021 because the need just isn't going away.

Kelsey Snell, NPR News, Washington.

(SOUNDBITE OF ANNIE SONG, "ANTHONIO (FRED FALKE REMIX)") Transcript provided by NPR, Copyright NPR.