Title: “2019 Report on Qualified Charitable Distributions from IRAs”
Organization: FreeWill
Summary: Gifts to charities from individual retirement accounts, or IRAs, grew by an average of nearly 74 percent from 2017 to 2018, according to a new study.
The average donation from an IRA was $9,200. Just over half of nonprofits surveyed said they saw an increase in the average IRA gift to their organization in 2018.
The contributions, called QCDs but formally known as qualified charitable distributions, can be given by anyone age 70 1/2 or older. People are required by the Internal Revenue Service to start withdrawing money from their IRAs when they reach that age. Donations from an IRA can satisfy that requirement and help avoid IRS penalties; donors can make gifts of up to $100,000 from their IRAs annually.
Twenty-seven percent of organizations surveyed said they think the changes to the federal tax code, are responsible for the uptick in giving from IRAs. With the new tax law, many donors are no longer itemizing their tax returns and therefore do not have access to the charitable deduction. Half of all survey participants thought the tax changes combined with the aging of baby boomers were the chief drivers of the trend.
The report was produced by FreeWill, a company that provides online tools to help individuals plan their estates and nonprofits attract bequests and other planned gifts. The researchers conducted surveys and held conversations with more than 120 charities, with total revenue ranging from $1 million to $1 billion.
Among the findings:
- 92 percent of organizations said they saw an increase in qualified charitable distributions from 2017 to 2018.
- 57 percent of organizations said they plan to increase their marketing regarding IRA donations in 2019. “Every supporter over 70 should be receiving information on how to make a QCD gift, given that standard giving no longer has tax advantages for many,” says the report.
- Significant obstacles prevent more donors from giving through their IRAs. Seventy-seven percent of nonprofits said the top challenge when processing the gifts is the lack of information shared by IRA providers, according to the study. And many charities may be disorganized about processing the gifts: Nearly 1 in 4 organizations surveyed said “a combination of departments” hold responsibility for gifts from IRAs.
“QCDs are slipping through the cracks at many organizations, as they live in a gray area between annual giving and planned giving,” the report says. It behooves charities, however, to get their act together, the report continues, as “QCDs are actually replacing annual gifts for many donors.”
