If you are 70 ½ or older, this time of year presents a great opportunity for tax–smart giving, especially if you are charitably inclined and don’t need your IRA funds for living expenses.
At the Community Foundation we work with many donors each year to help them plan ways to use their IRA to give back to causes they care about. This is called a qualified charitable distribution (QCD). Last year alone, donors made over 50 gifts that totaled more than $403,000 from their IRAs through a QCD. Some of these gifts benefited endowment funds held by the Community Foundation for a nonprofit a donor loves, while other gifts benefited the Foundation directly to support our work and several gifts were passed through directly to local nonprofits.
Consolidating your charitable giving from an IRA to the Community Foundation makes it easier for donors. It’s only one request to a financial advisor or financial institution, instead of one request per charity, and the Foundation handles providing the gift to the funds and/or nonprofits you choose.
Why give from your IRA?
- You can effortlessly benefit nonprofits you care about.
- A QCD may be used to satisfy some or all of your RMD without having income tax on the amount you give.
- QCDs are not included in adjusted gross income (AGI), which can provide a number of tax-related benefits.
- A QCD can be used to make gifts to multiple charities, up to $100,000 annually.
- Even if you do not itemize deductions, QCDs may provide a tax benefit.
Organizations like the Old Newsboys of Port Huron, Yale Public Schools, the YMCA endowment fund, Habitat for Humanity, Port Huron Police Department, and local churches have all benefitted from donors using their IRA to give back and doing it through the ease of one gift to the Community Foundation.
How have donors used QCD gifts?
- Using the Foundation to pass through gifts to various nonprofits including a church
- Creating an endowment fund for a beloved charity
- Creating a fund around a field of interest such as small business support
- Providing scholarships
- Support the work of the Community Foundation
For many of us, being generous with our money is one of life’s great joy, and it turns out that being generous with an IRA can be both personally satisfying and provide tax benefits as well.
So, if you are 70 1/2 or older and you would like to start or continue giving to charitable organizations that are doing meaningful work in your community, look beyond your checkbook and start tapping into the personal and financial benefits of donating directly from your IRA.
Please reach out with any questions and to confidentially explore your charitable giving options through an IRA by reaching out to Jackie Hanton at jackie@stclairfoundation.org or 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 your professional advisor to determine the impact of making a QCD on your particular situations.