The Qualified Charitable Distribution (QCD) is creating quite the buzz in the nonprofit sector! Through a QCD, a donor who has reached the age of 70 ½ may be eligible to make annual distributions of up to $100,000 from IRAs directly to a qualifying public charity. As you no doubt are aware, in December 2022, Congress passed new laws that codified the much-anticipated Legacy IRA. The Legacy IRA expands the QCD to allow a donor to make a one-time, $50,000 QCD to a split-interest vehicle such as a charitable gift annuity or charitable remainder trust. The new law also indexes the QCD cap for inflation in future years.
An Opportunity Presented
With the QCD now top of mind for many of your donors, now is a great time to review the various assets that your donors can give to support your mission–especially your endowment and reserve funds. Need help? SACF can help you facilitate complex gifts and meet your donors’ desire to both support your mission and maximize their own tax and estate planning goals.
For example, highly-appreciated, publicly-traded securities are tax-effective gifts to your organization, especially because the donor’s capital gains tax can be avoided.
In addition to giving through an IRA via a QCD, giving via a bequest of an IRA or other qualified retirement plan using a beneficiary designation is an excellent charitable giving technique because the donor avoids both income and estate tax on the retirement plan assets flowing to charity.
In addition, real estate, closely-held business interests, collectibles, and other nontraditional assets can frequently come with strong tax benefits when given to a public charity such as your organization or to a fund at the community foundation. The proceeds from the sale can support your nonprofit, or, when the donor uses a fund at the community foundation, the proceeds can even support several organizations, including yours, if that’s what the donor intends.
And of course, donors can give cash. For donors who itemize deductions on their tax returns, dollars given to public charities are deductible up to 60% of adjusted gross income and excess deductions can be carried over and deducted in five future tax years. Related, a donor-advised fund at the community foundation can help a donor maximize an up-front charitable tax deduction, with the dollars flowing to your organization and other charities over a period of years.
The Sturgis Area Community Foundation is a $30M foundation committed to serving the charitable needs of our community and enriching the quality of life for all people in the Sturgis area. Through philanthropic services, strategic investments, and community leadership, Sturgis Area Community Foundation helps people support the causes they care about now and for generations.
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