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April 17, 2019

The IRA Charitable Rollover: An Opportunity on Many Levels

The IRA Charitable Rollover is not exactly a secret, but it’s also not something that all nonprofit fundraisers seem to know about. After our post last week on planned giving, I got a question about it from a reader who wanted more information. I wanted to make sure you were in the loop, too!

The IRA Charitable Rollover is a great way for donors at any level to make a gift with significant benefits, and important for you to know about so that you can bring the opportunity to your donors.

I’m not a financial advisor, but here’s the skinny on how the IRA Charitable Rollover works:

The IRA Charitable Rollover makes it possible for individuals age 70½ and older to make transfers of up to $100,000 per year from individual retirement accounts directly to qualified charities without counting the money distributed from the IRA as income for federal tax purposes.

While gifts directly from IRAs do not qualify for a tax deduction, they do count towards an individual’s Required Minimum Distribution (RMD).

The distributions must be made directly to the charity from the IRA plan administrator. The donor cannot take the money out and then gift it to the charity with the same advantages.

Distributions may only be made to 501(c)(3) tax exempt organizations and cannot be made to donors advised funds, private foundations, or supporting organizations. They can also not be used to fund planned giving vehicles like charitable gift annuities, charitable remainder trusts, or pooled income funds.

Spouses who are 70½ can also give up to $100,000 from their IRA. A couple could make a gift of up to $200,000 annually.

There are so many benefits of this gift for the donor. They can make a significant gift without using cash or other assets. They avoid taxes on the distribution, even if they don’t itemize. And they meet all or part their Required Minimum Distribution (RMD).

Donors are also able to use the IRA Charitable Rollover to augment their philanthropic giving at nearly any level.

Major Donors can use the IRA Charitable Rollover to fulfill capital campaign pledges and fund large, extraordinary initiatives.

Membership-level donors can use the IRA Charitable Rollover to fund their annual fund gifts.

Planned Giving Donors can use the IRA Charitable Rollover to make extraordinary gifts during their lifetime.

Organizations often see a decline in giving as people get older. Donors who are 70 and older may give less as their disposable income declines. But many of these same folks have assets like their IRA that they can give to organizations in tax advantaged ways. They just might not know about it.

Get the word out! Do your research on the IRA Charitable Rollover, develop your own language, and let you donors know about it. You can put blurbs in newsletters and other communications. Better yet, go directly to some of your older donors and ask if they would like to hear more.

There’s also lots of language out there. Here’s a page on it from the National Association of Charitable Gift Planners.

Like in all planned giving, you don’t have to be a financial expert to let people know about this opportunity. You’re just letting your donors know about the opportunity. Their financial advisor will know what’s best for them.

How can you integrate the IRA Charitable Rollover into your messaging for older donors at all levels of giving?

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