Qualified Charitable Distributions: Reaching IRA Donors Before December

The Rules, Stated Plainly Enough to Repeat on a Phone Call

A qualified charitable distribution is a transfer of money from an individual retirement account directly to a qualifying public charity, made by an account owner who has reached a specific age, which is excluded from that person's taxable income. The IRS describes it as "an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity," in its guidance on IRA distributions and withdrawals. Every word in that sentence is load-bearing, and the most common mistakes in the sector come from ignoring one of them.

Start with age, because this is where fundraisers most often get confused. The eligibility age for a QCD is 70 and a half. The age at which a person must begin taking required minimum distributions is separate and currently later, at 73 for most people affected today. Those two numbers used to be the same, and the fact that they no longer are creates a real window: there are donors who can make a QCD but are not yet forced to take any distribution at all. Getting this wrong in a newsletter is an easy way to tell a whole cohort of eligible supporters, incorrectly, that the option is not open to them yet.

Next, the limit. The annual amount a person can exclude is capped, and since the SECURE 2.0 Act that cap has been indexed for inflation, which means it changes every year and anything you wrote last December is already out of date. The figure was $105,000 for 2024 and $108,000 for 2025. For 2026 the IRS set it at $111,000 per individual in Revenue Procedure 2025-32. The cap is per person and not per couple, so two spouses who each own an IRA and file jointly can direct up to $222,000 between them in 2026. Put a calendar reminder in November each year to check the new number before any materials go out, because a stale figure in a mailing is the kind of small error that undermines confidence in everything else you said.

Then the direct transfer requirement, which is absolute. The money must move from the IRA custodian to the charity without passing through the donor's hands. A donor who withdraws funds, deposits them in a personal account, and writes you a check has not made a QCD. They have taken a taxable distribution and made an ordinary contribution, which is a materially worse outcome for them and one that cannot be undone after the fact. This is worth stating in plain language in every piece of marketing you produce, because it is the single most common way a well-intentioned donor loses the benefit they were trying to capture.

Finally, the tax mechanics, which sound counterintuitive until you look at them properly. The donor receives no charitable deduction for a QCD. None. Instead, the distribution is simply excluded from income, so it never appears in adjusted gross income at all. For most eligible donors that exclusion is worth more than a deduction would be, because a lower AGI can reduce the taxable portion of Social Security benefits, affect Medicare premium surcharges, and keep the donor below various thresholds that key off AGI. And crucially, it works whether or not the donor itemizes. A retired couple taking the standard deduction gets a genuine tax benefit from a QCD and effectively no tax benefit from writing a check.

One more mechanic matters for donors who are already 73 or older. A QCD counts toward that year's required minimum distribution, up to the amount transferred. A donor with a $40,000 RMD who makes a $15,000 QCD has satisfied $15,000 of it and will take the remaining $25,000 as ordinary taxable income. This is the version of the pitch that lands hardest with donors who resent being forced to take money they do not need: the distribution is happening either way, and this is the one route that keeps it off the tax return.

The One-Time Split-Interest Election Most Fundraisers Have Never Used

Tucked inside SECURE 2.0 is a provision that gets almost no attention in development offices and deserves more. Once in a lifetime, an eligible IRA owner may direct a QCD to fund a split-interest vehicle: a charitable remainder annuity trust, a charitable remainder unitrust, or a charitable gift annuity issued by the receiving charity. The amount is capped separately and is also indexed, set at $55,000 for 2026, up from $54,000 for 2025.

Two details determine whether this is useful to you. First, it is genuinely once in a lifetime. A donor who uses it in 2026 cannot use it again in 2027, so the conversation is not a recurring ask. Second, the split-interest amount sits inside the annual cap rather than on top of it. A donor who directs the full $55,000 to a charitable gift annuity in 2026 has $56,000 of ordinary QCD capacity left that year, not the full $111,000.

The practical value is that it gives you a way to talk about income-producing gifts with a donor whose money is all in an IRA. Charitable gift annuities have always appealed to older supporters who want to give but worry about outliving their savings, and historically the obstacle was that funding one meant liquidating taxable assets. This route removes that obstacle for a meaningful slice of your file. If your organization already issues gift annuities, this belongs in your planned giving program conversations as a standing option rather than a footnote. If your organization does not issue them, be honest about that rather than improvising, because a gift annuity is a contractual obligation with state regulatory requirements and reserve rules behind it.

A note of proportion. For most organizations this will be a handful of gifts a year at most, and it should not consume the attention that ordinary QCD prospecting deserves. Know it exists, be able to describe it accurately in one paragraph, and have a name at a partner organization or a planned giving consultant you can bring into the conversation when a donor expresses real interest. That is the correct level of investment for a once-in-a-lifetime election with a five-figure cap.

Finding QCD Prospects When Your CRM Does Not Know Anyone's Age

Here is the practical problem every development shop hits immediately. QCD eligibility turns entirely on age, and almost no nonprofit database has reliable birth dates for more than a fraction of its file. Asking donors their age directly is awkward, low-yielding, and slightly insulting. So the work is to build a probability model out of the signals you do have, target broadly on those signals, and let donors self-identify rather than trying to pin down who is 71.

The strongest single proxy is giving tenure. A donor whose first gift is twenty-five years old is statistically far more likely to be past 70 than one who gave first in 2022. Layer on channel behavior: donors who still give by paper check, who respond to direct mail rather than email, and who have never used your online form skew significantly older. Add gift pattern signals, particularly donors who give one annual gift in December rather than monthly, and donors whose giving stepped up noticeably around what might have been a retirement. Then add explicit signals you may already hold: anyone who has told you they have included you in their will, anyone who attended a legacy society event, anyone who asked a question about stock gifts.

None of these is conclusive and none needs to be. The aim is a segment, not a diagnosis. A list built from long tenure plus check-giving plus December concentration will contain plenty of people who are 62 and not eligible, and that is fine, because the message is informational rather than presumptuous. Write it as "if you are 70½ or older and have an IRA, here is an option worth knowing about" rather than "as someone approaching retirement." The first is useful to everyone and offensive to nobody. The second is a guess made out loud.

There is also a straightforward operational route that many organizations skip: look at who has already done it. Pull every gift in the last five years that arrived from a financial institution rather than an individual, and you will find donors who made a QCD without either of you naming it as such. Those people are your highest-probability prospects for next year, they are provably eligible, and many of them will repeat annually if simply reminded. This is often the single most productive hour anyone spends on QCD prospecting, and it requires no modeling at all. It does require that your data is clean enough to search, which is why getting your CRM in order is the unglamorous precondition for most of this.

A word of caution on wealth screening and appended demographic data. Vendors can append estimated ages and estimated retirement asset holdings, and those appends vary in quality. Using them to build a suppression list is reasonable. Using them to make a five-figure ask to someone the model thinks is wealthy is how gift officers end up in uncomfortable conversations. Treat appended data as a weak prior, and remember that the same judgment applies here as in any other donor scoring exercise: the model proposes, a human decides, and nobody receives a solicitation based purely on an inferred attribute.

The Check With Nobody's Name On It

A QCD frequently arrives as a check drawn on a large financial institution, payable to your organization, with a memo line that may contain an account number, a partial name, or nothing useful at all. There is no letter, no reply envelope, and no return address you recognize. To a gift processor working through a December mail pile, it looks like an unattributable gift from a bank. It goes into a suspense account, it does not get acknowledged, and a loyal donor who just gave you five thousand dollars hears nothing.

This is the most fixable failure in the whole QCD workflow, and fixing it is worth more than any amount of marketing. It requires a defined process, a place to put unmatched gifts, and a person responsible for working that queue rather than letting it accumulate until the audit.

The process itself is not complicated. When a check arrives from a custodian, capture everything: the institution, the check number, the date, the amount, the full memo line, the address printed on the envelope, and any account reference. Then work the matching in order of confidence. Search your database for the exact amount against recent pledges and past gifts. Search for the name fragment if there is one. Search for the address, because custodians often print the account holder's address rather than their own. Check whether the amount matches a prior year gift from a specific donor, since QCD donors are highly repetitive. If those fail, call the custodian's charitable services line, which can sometimes confirm the donor's name or at least pass a message to the account holder.

When a match succeeds, record it properly. Flag the gift as an IRA distribution in a dedicated field rather than burying the fact in a note, because that flag is what drives the correct acknowledgment, prevents the gift from being attached to an event benefit, and builds the eligible-donor list you will use next October. Organizations that skip this step lose the intelligence permanently, and a year later they are back to guessing who their QCD donors are.

When a match fails, do not just hold the money silently. Your annual QCD communication should include a line asking donors to let you know when they have instructed their custodian, ideally with a simple form capturing their name, the institution, the amount, and the expected timing. A donor notification received before the check is the single most effective solution to the matching problem, and it costs nothing to ask. Some organizations also send a short note to the address on the envelope acknowledging receipt of a gift from an IRA and asking the recipient to confirm their details, which frequently resolves the match on its own.

Marketing It: Newsletters, Birthdays, and the Year-End Appeal

Most organizations market QCDs in exactly one place, a paragraph buried in the November appeal, and then conclude that the channel does not work. It works when it is repeated, when it appears in places donors are not braced for a solicitation, and when the language is informational rather than transactional. The goal of a QCD message is not to close a gift in that moment. It is to make sure the option is in a donor's head in the weeks when they and their advisor are deciding how to handle the year.

The newsletter mention is the workhorse. A short standing item, three or four sentences, placed consistently, stating that supporters aged 70½ or older can give directly from an IRA, that the transfer is excluded from income, that it can count toward a required minimum distribution, and that a phone number and a named person are available to help with the paperwork. Run it in every issue, not just the autumn one, because eligibility arrives on a rolling basis and the reader who ignored it in March is a different reader in September. Include your legal name and employer identification number, since that is exactly what the custodian will ask for and a donor who has to hunt for it may not complete the request.

The birthday touchpoint is the most underused opportunity in the entire playbook. If you hold a birth date for a donor, a warm note in the month they turn 70 or 71 that mentions, among other things, that a new giving option has just become available to them, is a remarkably well-received message. It is personal, it is timely, and it tells the donor something genuinely useful about their own situation rather than asking them for something. Even where you only hold a birth month without a year, a general birthday sequence to your long-tenured segment can carry the same information. These fit naturally into existing stewardship sequences rather than requiring a new program.

In the year-end appeal itself, give the QCD its own segment and its own copy rather than a universal footnote. Your eligible-looking segment gets a version that leads with the IRA option and a November deadline. Everyone else gets your standard appeal. The two versions should look and feel like the same campaign, but asking a 45-year-old monthly donor to consider a qualified charitable distribution is noise, and burying the QCD option in fine print for the people who need it is a wasted opportunity.

Two further placements repay the effort. A dedicated page on your website, findable by searching your organization's name alongside "IRA gift," with your legal name, EIN, mailing address for checks, and a sample instruction letter a donor can hand to their custodian. And a short mention in your legacy and bequest materials, because the audiences overlap heavily and a donor considering a gift in their will is already thinking about their estate. Organizations with an established legacy giving program often find the QCD is the easiest first step for a donor who is not ready to talk about their will, and the conversation about one leads naturally to the other.

What a Working Program Looks Like in a Small Shop

None of this requires a planned giving officer or a new system. It requires about two days of setup and then a modest recurring commitment, which is why it is worth doing even in an organization with one and a half fundraisers and no capacity for anything new.

The setup is concrete. Add an IRA distribution flag to your gift records and a place to store the custodian name. Run the retrospective search for past gifts from financial institutions and code them. Build the separate acknowledgment template. Write the reconciliation procedure and decide who owns the unmatched queue. Add your legal name, EIN, and mailing address to a dedicated web page with a sample instruction letter. Verify the current year's indexed cap. That is the whole build.

The recurring work is smaller. Refresh the figures each September. Send the October letter and the November reminder to the segment. Keep the newsletter item running. Deposit IRA checks the day they arrive in December. Work the unmatched queue weekly in January. Report the results to the board once a year. A single person can carry all of that alongside other duties, and the return on it compares favorably with almost anything else available to a small development team, because the gifts are large, the donors are loyal, and the repeat rate is high.

Measure a few things so you know whether it is working. Track the number of QCD gifts and their total value, separately from general individual giving. Track the repeat rate, which for QCD donors is usually strong and is the best early indicator that your stewardship is landing. Track how many gifts arrive unmatched and how long they sit, which is the operational health metric. And track how many donors notify you in advance, which tells you whether your marketing is reaching the right segment or just reaching everyone.