By Laura Fitzgerald

Are you at least 70 ½ years old and looking for tax-smart ways to make a positive impact on your community? Consider making a donation through your IRA to one of the Community Foundation’s many charitable options.

“I had to take funds from my IRA this year for my required minimum distribution. So, I worked with the Community Foundation to coordinate donations that were very important to me and started to build my legacy fund for local causes,” said Sue Ann Ostrom.

Sue Ann is a long-time friend of the Community Foundation supporting things like the Back-to-School event, the Blue Water River Walk and the Women’s Initiative. Over the past 15 years she has become a firm believer in the good works the Community Foundation provides for the area and appreciates the help in supporting charities that she is passionate about.

Donors, like Sue Ann, have taken the opportunity to use their required minimum distribution to create charitable funds that support student success in the trades or at college, to build a charitable fund that will focus on local economic opportunities, to give to their church and to benefit the work of the Foundation’s grantmaking committee.

The Community Foundation takes the guesswork out of giving from your IRA by assisting donors in making a qualified charitable distribution (QCD) for their favorite cause. Donors can consolidate their giving by making one QCD to the Community Foundation and then having gifts passed through to nonprofits or by giving to endowment funds held by the Foundation that support these nonprofits. Donors also have the option of giving to the Community Foundation directly to support local grantmaking.

“I encourage donors who are old enough to look at any charitable gifts they currently give from their checkbook and consider using their IRA to give back instead,” said Jackie Hanton, Community Foundation Vice President.

“When you give back from your IRA, QCDs are not included in adjusted gross income (AGI), which can provide a number of tax-related benefits. Everyone likes to save on taxes.”

Last year, donors gifted nearly $400,000 from their IRAs to support endowment funds at the Community Foundation and nonprofits like Old Newsboys, the YMCA, Blue Water Safe Horizons, or their church.

Giving back through your IRA is easy. It’s only one request to your financial advisor to give to the Community Foundation, instead of one request per charity. The Foundation will then assist donors in the entire giving journey, from choosing a cause important to you, to making the contribution anonymously, if you wish.

Click here for a helpful graphic with more details on how QCDs work.

Why give from your IRA?

Tax Benefits:

• Benefit charities you care about.
• QCDs are not included in adjusted gross income (AGI), which can provide a number of tax-related benefits.
• A QCD may satisfy some or all of your RMD without having income tax on the amount you give.
• You can make gifts to multiple charities, up to a total of $105,000 annually.
• Even if you do not itemize deductions, QCDs may provide a tax benefit.

Consolidate your giving:

• You can use a QCD to benefit multiple nonprofits, creating a broad impact that supports local causes and communities.
• You can give anonymously
• Work with Foundation staff to explore giving options.

Numerous donors each year will work with the Community Foundation to consolidate their giving. They request one QCD to the Community Foundation then work with staff to determine what endowment funds they would like their funds to go to and even pass gifts through to charities they love. The Foundation is happy to work with donors on exploring options for giving and creating the best plan to meet their needs.

Make a Lasting Impact:

• You can create a legacy of lasting and sustainable support for one or more nonprofits important to you that will remain even after your lifetime.

Tax Planning for charitable beneficiaries:

When planning a charitable gift from your estate, certain types of accounts are particularly advantageous for giving to charity due to tax benefits and the way these accounts are treated in estate planning.

Retirement Accounts (Traditional IRA, 401(k), 403(b))

• Tax Benefits: Retirement accounts like traditional IRAs, 401(k)s, and 403(b)s are subject to income taxes when distributed to heirs, but if given directly to a charity, the charity can receive the full amount without paying taxes- no limit on amount given. This makes retirement accounts an excellent option for charitable donations.

Use the Community Foundation as your giving hub to help you make charitable distributions during your lifetime, explore your giving options and to plan your most impactful gifts.

The Community Foundation handles thousands of gift transactions each year and welcomes the opportunity to confidentially explore your charitable giving options through an IRA. Feel free to reach out to Jackie Hanton at [email protected] or by call 810-984-4761.

This information is not a substitute for expert legal, tax, or other professional advice, and we strongly encourage donors to work with their professional advisor to determine the impact of making a QCD on their particular tax situations.