QCDs

Making Them Repeatable Gifts

Qualified charitable distributions (QCDs) are a practical, repeatable way for donors to give out of their assets (specifically IRAs) rather than only from checkbooks or through post‑death gifts. QCDs can become a natural “on‑ramp” to larger and more strategic planned gifts for many donors in their 70s and beyond.

What QCDs Are and Why They Matter

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A QCD is a direct transfer from a traditional IRA to a qualified non-profit, available once a donor is age 70½.
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For most donors, IRAs are now one of their largest assets, often larger than their homes, making them a prime source for charitable giving.
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Since the 2017 tax law changes, many donors no longer itemize deductions, which means traditional cash gifts often provide little or no tax benefit; QCDs remain highly tax‑efficient in this environment.
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The annual QCD limit is now indexed for inflation; current guidance allows six‑figure distributions per individual directly to a non-profit (or spread across multiple non-profits) each year, subject to IRS rules and annual limits.

Key Tax and Planning Concepts

Age thresholds

  • Donors may begin QCDs at 70½.
  • Required minimum distributions (RMDs) now start at age 73 under SECURE 2.0, with a later shift to 75 for younger groups.
Read About Secure 2.0

Proper Structure

A properly structured QCD can satisfy all or part of a donor’s RMD for the year, while keeping that amount out of their taxable income.

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Reduced AGI

This can reduce adjusted gross income (AGI), which in turn helps with:

  • Lower federal income tax
  • Lower Medicare premiums
  • More favorable Social Security taxation

IRA Distribution Rules

Inherited IRAs now face tighter distribution rules (including mandatory annual distributions within a 10‑year window, with some proposals to shorten that), making lifetime IRA charitable planning more important for many families.

How a QCD Works in Practice

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The donor instructs their IRA custodian to send funds directly to the non-profit; the gift cannot pass through the donor’s hands, or it becomes taxable income.
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The non-profit deposits the gift and sends a QCD‑specific acknowledgment confirming:

  • Date and amount received
  • That it came directly from an IRA provider on the donor’s behalf
  • That no goods or services were provided in return
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Because QCDs operate by excluding income rather than creating a deduction, donors must also tell their tax preparer that a distribution was a QCD and keep both the custodian documentation and the non-profit’s acknowledgment.

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Donors and nonprofits must be careful with IRA check‑writing: the check must clear the IRA before year‑end for it to count, and QCDs cannot be used for events, galas, auctions, or other quid‑pro‑quo transactions.

Why QCDs Are Powerful Fundraising Tools

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Many donors—even financially savvy ones—still do not know QCDs are possible or that nonprofits can be named as IRA beneficiaries.

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QCDs often lead donors to increase their annual giving significantly once they understand they can give from their IRA rather than from cash flow.

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For fundraisers, a QCD is a valuable “gateway gift”:

  • It sits between annual fund and major gift behavior.
  • It gets donors comfortable using assets for philanthropy.
  • It naturally opens the door to conversations about IRA beneficiary designations and other planned gifts.
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Tracking QCDs also provides insight into a donor’s potential IRA size and overall asset capacity, supporting better prospecting and stewardship.

Roles, Pitfalls, and the Importance of Stewardship

There are four key players in every QCD: the donor, the non-profit, the IRA custodian, and the tax preparer.

Donor

Initiates the transfer, supplies the non-profit’s correct legal name and address, and explicitly tells the custodian and tax preparer that this is a QCD.

Non-Profit

Identifies QCDs when they arrive, issues a dedicated QCD acknowledgment (without standard “tax‑deductible gift” language), and flags these gifts and donors in the CRM.

Custodian

Executes the transfer, should label the distribution correctly, and reports it on Form 1099‑R using updated codes indicating QCD treatment.

Tax Preparer

Properly reports the QCD so it is excluded from taxable income, avoiding errors like treating it as a standard cash gift.
Download a QCD Acknowledgment Letter

Because “you can’t steward what you can’t see:”

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Always flag QCD gifts in your database (gift subtype and/or donor attribute).
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Use that intelligence for tailored cultivation, including future conversations about major gifts and beneficiary designations.

Practical Next Steps and Calendar Ideas

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Pull last year’s QCD donors and personally thank them, while they are actively working on their taxes.
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Review and update acknowledgment templates to ensure you have a QCD‑specific version ready.
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Confirm that your CRM has a clear way to code QCD gifts and, ideally, QCD donors as a segment.

Suggested Ongoing Touchpoints:

January–April

Thank QCD donors from the prior year and remind them to share QCD documentation with their tax preparers.

October

General QCD reminder as many donors start thinking about RMDs and year‑end planning.

November

Specific reminder for donors who use IRA check‑writing to act early enough that checks clear by year‑end.

Age‑based education

Begin QCD education around age 70 and consider outreach to adult children who may be helping manage their parents’ finances.

When fundraisers can confidently talk about QCDs, they help donors “give more and keep more,” while building a strong pipeline for larger and more intentional planned gifts over time.

Interested in learning more? Contact us today!

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