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Encouraging QCDs (Qualified Charitable Distributions) — Church and NFP Actions

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Encouraging QCDs (Qualified Charitable Distributions) — Church and NFP Actions

Since January 1, 2018, generous supporters at least 70½ years old have enjoyed a new means of giving. No longer should they find themselves withdrawing funds from their Individual Retirement Accounts (and paying tax) only to make charitable contributions that have no tax deduction benefit.

To recall, these donors can have their IRA companies withdraw from their retirement investments, sending the distributions directly to the charities of their choice. They cannot deduct the amounts as tax write-offs, but neither do they owe tax on the distributions. These distributions also satisfy IRS rules for annual Required Minimum Distributions (RMDs) that are mandatory beginning at age 73.

How can your church or NFP assist these donors?

1.      Educate. Make sure your supporters understand QCD rules and processes. Encourage them to ask their IRA investment advisors for clear instructions to arrange direct IRA-to-charity funds transfers.

2.      Document. Donors must accurately report the IRA distributions that are QCDs on their Forms 1040. Your organization’s annual giving statements can help. While QCD gifts cannot be deducted as charitable contributions on your donors’ tax returns, contributors still must obtain written proof of them. As CPAs, we see some annual reports from churches and NFPs that are confusing. Record all their gifts on your statements, including QCDs. It’s up to the donors to know the rules. But you can help by providing annotations that list the source. For example, “from [Fidelity] IRA account of [Jane Doe].” If the donor is married, it is important to note which spouse’s IRA made the transfer.

Much more could be said about QCDs, but we’ll share just one more fact: the 2025 limit per spouse is $108,000. Inflation adjustments will result in greater future years’ limits.




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