For many philanthropically minded individuals, giving to charity is more than a seasonal act of goodwill—it's a core part of their values and financial planning. But what if your retirement assets could help you give more without costing you more?

For those holding Individual Retirement Accounts (IRAs), there are strategic ways to support nonprofit causes that not only amplify your impact but also carry powerful tax advantages. Whether you're a retiree seeking to satisfy your Required Minimum Distribution (RMD) or planning for legacy giving, understanding how to use IRA assets for charitable purposes can unlock a smarter, more efficient way to give.

Why IRA Assets Are Powerful Philanthropic Tools

IRAs are tax-deferred retirement vehicles—meaning funds grow tax-free until you withdraw them. But once distributions begin, they're treated as taxable income. This makes them a less-than-ideal asset to leave to heirs in many cases. For nonprofits, however, IRAs are perfect. As tax-exempt entities, charities receive IRA gifts without paying a cent in tax, meaning more of your money goes to the cause you care about.

This creates a rare win-win: donors reduce their tax burden, and nonprofits receive the full value of the gift.

Qualified Charitable Distributions (QCDs): A Tax-Efficient Giving Method for Donors 70½+

If you are aged 70½ or older, the IRS offers one of the most advantageous giving strategies available: the Qualified Charitable Distribution (QCD). This provision allows you to transfer funds directly from your IRA to a qualified 501(c)(3) nonprofit—up to $100,000 per year (indexed for inflation, rising to $105,000 in 2024 and $108,000 in 2025).

The key benefit

• It's never taxed. The amount you donate via QCD is excluded from your gross income.
• It counts toward your RMD. For those age 73 or older who are required to take distributions, a QCD can fulfill all or part of your RMD obligation.
• It reduces your Adjusted Gross Income (AGI). This can positively impact everything from Social Security taxation to Medicare premiums.

Importantly, QCDs must be made directly from the IRA to the nonprofit (not withdrawn and then donated). Donor-advised funds and private foundations are not eligible recipients, and no goods or services can be received in return.

What About Donors Under Age 70½?

Younger donors can still give IRA assets to nonprofits, but the process looks different. Without access to QCDs, any IRA distribution is treated as taxable income—potentially triggering a 10% early withdrawal penalty if you're under age 59½.

You can take a distribution from your Traditional or Roth IRA and then donate the funds to charity, claiming a charitable deduction if you itemize, but it rarely results in a net-zero tax impact.

A better alternative is to name a nonprofit as your IRA beneficiary. This doesn't provide immediate support to the organization, but upon your death, the charity receives the funds tax-free—making it one of the most efficient legacy gifts possible.

New Opportunities: Lifetime QCDs to Charitable Gift Annuities or Trusts

The SECURE 2.0 Act introduced a one-time opportunity to make a QCD of up to $50,000 to a charitable gift annuity (CGA) or charitable remainder trust (CRT). This allows you to receive fixed income payments for life, with the remainder going to a nonprofit upon your passing—though it comes with strict limitations and should be approached with financial and legal guidance.

Why Nonprofits Should Talk About IRAs

Many nonprofit leaders focus their fundraising messaging on cash donations, but IRAs offer a powerful, often overlooked funding stream—especially among older donors. For many, IRA giving is not about writing a larger check—it's about not giving more to the IRS.

Practical Next Steps

For nonprofits:

• Add a "Give from Your IRA" section to your website and year-end appeal materials
• Educate your donors aged 70½+ on QCDs
• Coordinate with financial advisors or estate planners to be included in IRA beneficiary discussions

For donors:

• Talk to your financial advisor or IRA custodian about initiating a QCD
• If under 70½, consider naming a nonprofit as your IRA beneficiary for a highly tax-efficient legacy gift
• Avoid receiving goods or services in exchange for IRA-based donations to preserve full eligibil

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