A Qualified Charitable Distribution allows individuals aged 70½ or older to donate up to $100,000 directly from their traditional IRA to a qualified charity without incurring taxable income.
Unlike a standard charitable donation, a QCD doesn't require the donor to itemize deductions. The distribution is excluded from the donor's gross income, which can be particularly beneficial for those:
Planning Tip: Married couples can each make a QCD up to $100,000 annually from their respective IRAs, allowing for up to $200,000 in tax-free charitable contributions per year.
The distribution avoids income tax, even for those who don't itemize.
Many retirees are more willing to give generously when they can do so in a tax-efficient way.
Since QCDs can count toward RMDs, they may become an integral part of a donor's annual financial routine, providing your nonprofit with a dependable source of funding.
Yet, many eligible donors are still unaware of this opportunity or how easy it is to make a QCD. This is where your organization can step in to educate and engage.
Action Steps for Nonprofits
Incorporate QCD information in donor newsletters, year-end giving guides, and direct appeals, especially to those aged 70+.
Provide sample QCD letters or instructions that donors can share with their IRA custodians to initiate a transfer.
While QCDs don't require a formal donation receipt for tax purposes, sending a clear acknowledgment helps build relationships and encourages repeat giving.
Share stories or statistics showing how QCD gifts have advanced your mission. This adds transparency and encourages others to participate.
Need help crafting donor communications around QCDs or strategizing ways to engage IRA-age supporters? Our team can help.