As we approach the end of the year, people often begin to think about year-end charitable donations. Many may write an extra check to their charities of choice. Others may support nonprofits with grants from their donor advised fund. Your clients who are 70 ½ or older have another option. They can choose to use their individual retirement account (IRA) to make a qualified charitable donation (QCD). Using their IRA for charitable contributions may be a great way for these individuals to donate up to $105,000 from their IRA directly to charity without paying taxes on the donated amount.

Who Can Give Through a QCD?

Although there are strict limits on QCDs, they can be a wonderful tool for some clients. If your clients are charitably inclined and fall into the following age categories, a QCD may be a wonderful way for them to support their favorite causes.  Because QCDs minimize tax liability, they do not also receive a charitable tax deduction for QCD gifts. 

• For those who are 73 or older and are required to take a minimum distribution (but don’t need the funds and would face increased tax liabilities if they took the distribution as income) a QCD counts toward their RMD and is not subject to income tax, potentially keeping them in a lower tax bracket. 
• For those aged 70 ½ through 72, a QCD removes funds from an IRA before they reach the age threshold for Required Minimum Distributions (RMDs) at 73. This can lessen the amount of their RMD and subsequently the income tax that accompanies it. 

How Can a Client Work with CFCG on their QCD?

QCDs must be made to a qualified 501(c)3 organization, like the Community Foundation of Central Georgia. However, contributions to donor-advised funds, private foundations, and certain supporting organizations do not qualify. While the IRS prohibits making QCDs to a donor advised fund during life, naming a donor advised fund as the charitable beneficiary of an IRA at death is a good strategy. No matter which charitable giving strategy is right for your client, CFCG is here to help you guide your clients on ways to make an impact with their charitable giving. Here are a few recent examples of how donors have made QCD gifts to funds at the Community Foundation:

• A married couple each used their QCDs to create a scholarship fund for students at Mercer University. When donors establish a scholarship fund at CFCG, they can set the eligibility criteria and may serve on the selection committee to choose the scholarship recipients.
• An individual used his QCD to open a designated fund for his church. When donors wish to support one or more specific “designated” charities, they can create a designated fund to receive the donation and can then stagger the distribution to the charities over time.
• Many donors have used a QCD to make gifts to field of interest funds at CFCG. A field of interest fund benefits a specific charitable or geographic interest area, such as animals or education.  Lamar Gives 365 and the Coffee County Disaster Relief and Recovery Fund are examples of field of interest funds at CFCG.
• A donor made his QCD contribution to CFCG to support several endowment funds for local nonprofits such as Meals on Wheels of Middle Georgia, Macon Area Habitat for Humanity, Macon Volunteer Clinic, and the Family Counseling Center. 

QCDs are a tax advantageous way to enhance a donor’s philanthropic impact. By leveraging QCDs, donors can achieve their financial goals, support the causes they care about, and make a lasting difference in their community. 

We look forward to working with you to help your clients unlock the potential of charitable giving. 

For more information, please contact Julia Wood at 478-750-9398 or jwood@cfcga.org.