Here’s another acronym: QCD.
A QCD can help you decrease your federal and state taxes on RMDs. QCDs help your community as well. Best of all, you have everything you need to make a QCD work for you—at your fingertips, at no charge.
“We always tell donors the best way to contribute is through your IRA,” said Nakia Lipscomb, senior director, Development at The Dayton Foundation. “It avoids state and federal taxes and decreases your taxable income.”
Qualified Charitable Distributions allow you to meet your annual charitable giving goals through your IRA. And here’s the “so what”: That QCD amount counts as part of your RMD, lowering your annual taxable income.
“You get the tax benefit, and you maximize your donation,” Lipscomb said.
Here’s how a QCD works, she added:
- For 2025, if you are 70½ or older, you can donate up to $108,000 from your traditional IRA tax free. (QCD rules don’t apply to Roth IRAs.) If your spouse is 70½, that’s $216,000 annually. “It can be any lower amount,” Lipscomb noted. Some donors use QCDs to reduce their tax bracket. Plus reducing your IRA total can help decrease future RMD amounts.
- Donations must go to an IRS-approved charity. Lipscomb added that includes more than just 501(c)(3) non-profit organizations. You can donate to houses of worship, school and educational institutions as well as local municipalities.
- No individual can personally benefit from the donation. QCD checks or transfers bypass the donor. “Checks are in the charity’s name,” she said.
Lipscomb and her team at The Dayton Foundation have years of experience helping donors develop QCD plans that give donors the flexibility they desire. She and her team meet directly with donors —in person or by phone — to understand exactly what they want. Then the Development professionals document the donor’s wishes.
“We’re donor centric. We leave it in the donor’s hands. It’s their giving plan,” Lipscomb said.
After donors review and approve, the documents become a contract that the foundation fulfills, transferring funds on behalf of the donor. That’s important, Lipscomb said, because it demonstrates the direct-to-charity requirement the IRS requires.
“It’s a simple process,” she said. “Basically we only need to know the charity, the amount and the date (to send to the charity).”
And there is a lot of flexibility within those parameters, Lipscomb emphasized.
For example, The Dayton Foundation has already vetted many local, regional and national charities for donors. Plus, Lipscomb said, if the donor is unsure where to donate, the foundation can help them plan gifts to:
- Scholarships. The Dayton Foundation can help donors establish a scholarship or augment an existing scholarship. Currently the foundation manages more than 300 scholarships.
- Areas of interest. Lipscomb said sometimes donors have specific interests, such as animal rescue or child hunger, but they don’t have a specific charity in mind. The Dayton Foundation pools funds from multiple donors for specific needs. Charities can apply for grants.
- Community Impact Endowment Fund. “Donors tell us we have our thumb on the pulse of the community,” Lipscomb said. The foundation researches and identifies the area’s greatest needs and awards discretionary grants from this pooled fund.
Plus, she adds, this community fund helps the foundation and its donors respond quickly to needs such as damage from the Memorial Day 2019 tornados.
The Dayton Foundation can also help donors plan the timing of their QCD distribution. Though annual taxable income is decreased only in the IRA-withdrawal year, distribution to charities can take place later.
“You can give to a five-year capital project, once a year for five years,” Lipscomb said. “You can even tell us ‘sometime in the first quarter,’ and we will take care of it.
“It’s like you just set it and forget it,” she added. QCD contracts can even be part of estate planning.
There is still time in 2025 to meet with Lipscomb and her team to compile your QCD plan. And start thinking about QCDs to help manage 2026 taxes.
“The sooner that the donor can get a QCD out, the better. If you find out in January what your RMD will be, you can get started on it,” Lipscomb said.
She noted that her team works closely with the area’s financial and legal communities, overseeing fund transfers and regularly meeting with brokerage, accounting and legal firms just to keep updating them on what The Dayton Foundation offers. “We give them things they can put in their toolboxes to help their clients.”
GETTING STARTED
The easiest way to begin QCD planning?
“Call us. Schedule a discussion so we can help you help others in the most tax-efficient way,” said Nakia Lipscomb. She is available at 937-225-9954 or nlipscomb@daytonfoundation.org. You can also contact Marianne Requarth at 937-225-2296 or mrequarth@daytonfoundation.org. Michelle Lovely is also available at 937-225-9948 or mlovely@daytonfoundation.org.
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