Louis Fawcett’s Guide to Qualified Charitable Distributions for Donors

Louis Fawcett’s Guide to Qualified Charitable Distributions for Donors shows donors how to give tax-efficiently while helping nonprofits unlock sustainable gifts.

Nonprofit leaders and fundraisers know that major giving often comes from people who are passionate about the mission and who have the financial means to give strategically. Yet, even the most experienced development professionals sometimes overlook a powerful tool available to donors who are in or near retirement: Qualified Charitable Distributions (QCDs).

So many nonprofit professionals are so focused on getting donors to give an immediate gift, that they forget creative ways donors can contribute. If you are not regularly discussing QCDs with your supporters, you may be missing an opportunity to help them give in a tax-efficient way while significantly advancing your organization’s mission.

What is a Qualified Charitable Distribution?

A Qualified Charitable Distribution allows individuals who are age 70½ or older to contribute directly from their Individual Retirement Account (IRA) to a qualified public charity. The distribution goes straight to the nonprofit, bypassing the donor’s taxable income.

QCDs can count toward a donor’s Required Minimum Distribution (RMD), which begins at age 73 under current law. Since RMDs are mandatory withdrawals that increase taxable income, many retirees welcome the chance to redirect these funds to charitable causes instead of paying higher taxes.

In 2025, the annual limit for QCDs is $108,000 per person. For married couples, each spouse can contribute up to that amount, potentially doubling the impact.

Why Should Donors Care About QCDs?

For donors, the benefits of QCDs are compelling:

1. Tax Savings Without Itemizing
   Many retirees no longer itemize their deductions because the standard deduction is higher. QCDs allow them to give pre-tax dollars, lowering their taxable income even if they do not itemize.
2. Meeting RMD Requirements
   Instead of seeing RMDs as a tax burden, donors can transform them into purposeful gifts that directly benefit organizations they care about.
3. Making Larger Gifts Possible
   Because QCDs bypass taxable income, donors may feel more comfortable making larger gifts than they otherwise would from their checking accounts.
4. Simple Process
   Most financial institutions make it relatively easy to send QCDs directly to charities, often with just a form or secure online request.

Why Should Nonprofits Care About QCDs?

From a nonprofit’s perspective, encouraging QCDs is not just about donor tax benefits—it’s about unlocking a reliable and underutilized stream of giving.

• Older donors are your best prospects. Research consistently shows that most major and planned gifts come from donors in their 70s and 80s. These same donors are eligible to make QCDs.
• QCDs encourage repeat giving. Since RMDs are annual, donors often turn their yearly withdrawal into a yearly charitable contribution. This creates a steady rhythm of generosity for your organization.
• It positions your nonprofit as a helpful partner. By educating donors about QCDs, you demonstrate that you care about their financial stewardship, not just your fundraising goals. That builds long-term trust and loyalty.

How to Talk About QCDs with Donors

Conversations about taxes and retirement accounts can feel intimidating, but they don’t have to be. Here are practical ways to start talking with donors:

1. Add QCD Language to Your Materials
   Mention QCDs in your newsletters, donor guides, website, and appeal letters. A simple line such as:
   “Did you know you can make a gift to [Organization Name] directly from your IRA if you are 70½ or older? It may lower your taxable income while supporting our mission.”
2. Work with Professional Advisors
   Build relationships with financial planners, CPAs, and estate attorneys in your community. They are often the ones telling clients about QCDs. Position your organization as the natural partner to receive those gifts.
3. Host Educational Events
   Consider a breakfast briefing or webinar for your donors and their advisors on “Smart Ways to Give in Retirement.” Feature a tax expert or financial planner to explain QCDs and other strategies.
4. Use Stories and Examples
   Share real donor stories (with permission) of how QCDs helped them make a meaningful gift. For example: “John and Mary Smith used their RMD to fund scholarships last year, reducing their taxes while changing the lives of three students.”
5. Empower Your Gift Officers
   Train your development team to confidently explain what a QCD is (without giving tax advice). Equip them with a short script and FAQs so they can raise the topic naturally in conversations.

Common Misunderstandings to Clarify

When donors first hear about QCDs, they may have questions or misconceptions. Be ready to clarify:

• QCDs must go directly from the IRA to the charity. Donors cannot withdraw funds themselves and then write a check.
• Not all accounts qualify. QCDs can only come from IRAs, not from 401(k)s or other retirement accounts. However, donors can roll over those accounts into IRAs and then make QCDs.
• No goods or services can be exchanged. QCDs cannot be used to buy event tickets, memberships, or anything with a fair market value benefit. They must be pure charitable gifts.

The Strategic Opportunity for Your Organization

Here’s the reality: trillions of dollars are held in retirement accounts by Baby Boomers and older donors. As they reach their 70s and 80s, RMDs are becoming an increasingly significant issue.

If your nonprofit is not discussing QCDs, you risk missing out on transformative gifts that could sustain your mission for decades. By contrast, nonprofits that regularly educate donors about this option are seeing millions of dollars flow in each year through QCDs.

Just imagine: if even a small percentage of your older donors redirected part of their RMD to your cause, the impact could fund new programs, expand staff, or build reserves that strengthen your organization for the future.

Using MGRU to Talk to Donors about QCDs

The best way to open the discussion about creative giving is to incorporate QCDs in your overall Major Gifts Ramp-Up (MGRU) strategy. Using your MGRU Case for Support and learning MGRU methods of donor cultivation and asking, QCDs will become a natural part of your conversations with donors. This makes you a trusted philanthropic advisor for your donors and a long time friend.

You’re not only helping donors steward their resources wisely—you’re inviting them into a deeper, sustained relationship with your mission. And that’s the kind of fundraising strategy that pays dividends for generations.

Louis Fawcett’s Guide to Qualified Charitable Distributions for Donors was first posted at NANOE

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