Why Nonprofits Should Educate Donors About Qualified Charitable Distributions (QCDs)

Many nonprofits rely on the generosity of longtime supporters who want to give back in a tax-smart way. One of the most powerful, yet often overlooked, tools for these individuals is the Qualified Charitable Distribution (QCD).

Helping your donors understand this giving option can increase contributions, deepen relationships, and create win-win outcomes for both donors and your organization.

What Is a QCD?

A Qualified Charitable Distribution allows individuals age 70½ or above to make direct transfers—up to certain limits each year—from their Individual Retirement Account (IRA) to a qualified charity.

• For 2025, the annual QCD limit is $108,000 per individual.
• For 2026, the limit increases to $115,000, adjusted for inflation.

The amount donated counts toward the donor’s Required Minimum Distribution (RMD) (which now begins at age 73) but is excluded from taxable income. In other words, donors can satisfy their RMD obligations while supporting your mission—without increasing their adjusted gross income (AGI).

Why This Matters to Your Donors

For many individuals in or nearing retirement, IRA withdrawals can push them into higher tax brackets and increase the taxation of their Social Security benefits or Medicare premiums. QCDs help avoid those problems.

When donors give through a QCD:

• They can prevent phaseouts or surcharges tied to income thresholds.
• They can support your organization in a way that maximizes their after-tax giving power.

Such benefits can make a meaningful difference for supporters who want to align their financial planning with their charitable goals.

Why It Matters to Your Nonprofit

Nonprofits that proactively educate donors about QCDs often see an increase in year-end and recurring gifts. Here’s why:

1. Untapped Giving Potential
   Many supporters don’t realize they can give directly from their IRA. Highlighting this option can turn routine RMD withdrawals into impactful, tax-efficient gifts.
2. Larger, More Strategic Donations
   Since QCDs are pre-tax transfers, donors may feel more comfortable giving larger amounts—especially when doing so doesn’t increase their taxable income.
3. Deeper Relationships
   Conversations about QCDs position your organization as a trusted partner, not just a recipient. You’re helping donors achieve both their financial and philanthropic goals.
4. Year-End Opportunities
   The QCD deadline is December 31 each year, which aligns perfectly with year-end fundraising campaigns, providing a timely reason to reach out.

How to Get Your Organization QCD-Ready

To make the most of this opportunity, your nonprofit should:

• Educate your team. Ensure your development staff, board, and volunteers know what a QCD is and who qualifies.
• Communicate clearly. Include QCD messaging in newsletters, appeal letters, and on your giving web page (e.g., “Did you know you can make a tax-free gift directly from your IRA if you’re 70½ or older?”).
• Make it easy. Provide clear instructions and sample language donors can use with their IRA custodians.
• Acknowledge appropriately. Send thank-you letters confirming no goods or services were provided, and note that the gift was made via QCD.
• Collaborate with advisors. Partner with local CPAs, financial advisors, or estate planners to co-host informational sessions about charitable giving strategies like QCDs.

Important Rules to Remember

• The donor must be age 70½ or older at the time of the distribution.
• Funds must come from an IRA (not a 401(k) or donor-advised fund).
• The transfer must go directly from the IRA custodian to the charity.
• QCDs cannot go to donor-advised funds, supporting organizations, or private foundations.
• Donors cannot claim an additional charitable deduction for the QCD.

The Bottom Line

Qualified Charitable Distributions represent one of the most powerful giving tools available to individuals with IRAs—and one of the least understood. By taking the lead in educating your donors, your organization can:

• Strengthen donor relationships
• Unlock larger, tax-efficient gifts
• Align your fundraising strategy with your donors’ financial goals

QCDs truly are a win-win: your donors can give more effectively, and your mission can thrive.

Now is the perfect time to incorporate QCD education into your year-end fundraising and donor stewardship plans—before the December 31 deadline.